Landlord Mortgage Holders Face Insurance Shortfall

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Residential landlords are leaving themselves at risk by failing to take out the right insurance products for their property business.

Redbrick, a buy to let insurer, found that only two thirds of landlords have specialist buildings cover for their buy to let investments, whilst only 12% have combined legal expenses and rent guarantee insurance, even though 71% of landlords expect tenant arrears to increase in 2009.

Tony Armitage, insurance director of Redbrick Landlords says: "Landlords need to carefully consider their insurance needs and ensure that they are properly protected. It is amazing that only two thirds of landlords have specialist buildings insurance, with the other third presumably having a standard household policy or, worryingly, no insurance at all."

Redbrick says tenant arrears are on the increase in the recession and landlords can easily cover themselves for rent arrears through a rent guarantee insurance product, which also includes the legal expenses involved in evicting the tenant. But Armitage warns that there appears to be a lack of awareness about the availability of these products and in the current environment landlords should be doing all they can to protect themselves.

He adds: "Buy-to-let landlords have sophisticated insurance requirements for which a typical household policy is often unsuitable. The biggest irony is that some landlords are actually paying through the nose for potentially unsuitable cover."

If you don't think you have the right buy to let cover, you probably haven't got the right cover. Talk to a buy to let mortgage adviser bout which insurance you need for your specialist area. Buy to let can be a very profitable venture, but without the right cover, it can end up being a nightmare.

SOURCE: Paragon, 03/08/09

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