The Insurance company Axa has warned one in four landlords have absolutely no or wrong insurance cover and lack any necessary financial back up should a catastrophe occur on their property, according to Post Magazine (23rd September 2013)

Axa Business Insurance, their subsidiary, has accumulated data that shows a round 25% of landlords in the United Kingdom have bought standard owner occupied household insurance instead of a commercial landlords insurance policy, which leaves them extremely vulnerable to having claims turned down. Customers must ensure that they complete proposal forms accurately – in these cases, all insurers ask the type of occupancy – owner occupied is overlooked when it should state “let to professionals” or “let to students” or “unoccupied” to give a few examples.

Axa has come to the conclusion that a large percentage of those with the wrong insurance are described as “accidental landlords”, that is, those who did not buy originally with the intention of renting out their property, or who are forced to continue renting out because they cannot currently sell.

Axa researched among 425 residential landlords of those who had bought the wrong insurance and revealed that one in five had previously been living at the address themselves as owner occupiers and simply renewed the existing home insurance cover then they moved out, thinking this would still be adequate.

A whopping 43% were found to be unaware of the existence of cheap landlords insurance cover whereas 28% thought landlord and residential cover were the same and over 10% thought the landlord option was too expensive so bought a residential policy instead. Yet there are plenty of Cheap Landlord buildings insurance polices in the market that will also cover landlords contents also.

Almost three quarters of these landlords have less than £1000 set aside for any emergencies – 18% have nothing put aside or saved at ll, leaving them severely exposed financially should their insurance company refuse a claim because the wrong insurance is in place. Current estimates by Axa suggest one in twenty landlords are likely to claim in any given year.

Further research also revealed that 53% have a tenancy agreement, 27% have an up to date inventory and 54% have a retained deposit, less than half of which are kept in a protected scheme.

Managing Director at Axa Business Insurance, Darrell Sansom, was reported as saying: “While many of these people may well have never intended to become landlords and possibly it is something they would rather not have to think about, the consequences of not sorting out some of the basic admin and putting some core protection in place could make it a much bigger headache for them than it already is. “As an industry, insurers need to take some responsibility to ensure that the right questions are asked when customers are buying insurance. And consumers need to be made aware of the pitfalls of buying the wrong cover. “Someone else living in your property can present a very different insurance risk than you living there yourself – insurance products are designed and priced to match these risks so it’s important you get the right one.”

The ‘accidental landlord’ market has grown significantly over recent years as the economy has depressed the housing market. They beleive that around 70% of residential landlords rent just one property and that up to a third of these are ‘accidental landlords’ who can’t sell their property or who inherited rather than planned the ownership of the property. Unoccupancy is also an undisclosed factor also – Cheap empty property insurance policies are also freely available but often have restricted cover and differing premiums.