A specialist insurance provider says there is substantial mis-buying of insurance products by buy to let investors.
A survey of 500 landlords by Simple Landlords Insurance found that a quarter mistakenly insured their properties with a standard home buildings and contents policy.
Landlords with single properties were most likely to purchase the wrong type of insurance, with 28 per cent buying a standard home insurance policy.
A further 3.5 per cent said they didn’t have insurance and four per cent weren’t sure if they had insurance or not, while 41 per cent reported buying specialist cover.
The remaining quarter of landlords could reduce their insurance spend by avoiding duplicate cover as 25 per cent said they bought both specialist landlord and standard homeowners cover, suggesting they didn’t understand that landlord insurance also covers the risks to buildings common to both owner-occupied and rented properties.
Buy to let investors didn’t shop around much, either.
Three-in-five landlords said they renewed their policy automatically because they were happy with the service or quote they had from their previous provider or because they forgot to look around.
Just 20 per cent of landlords who shopped around at renewal saved money by changing insurer. Others ended up sticking with their insurer because the potential savings weren’t enough to persuade them to change providers.
“High quality insurance, at the right level for your personal risk can help free landlords to diversify their strategies and think differently about how, when and where they invest” says a spokesman for Simple Landlords Insurance.
“Whatever the reason, landlords - especially those with growing portfolios - are put off by the complication of moving their insurance. But it’s always worth shopping around to get the right cover at the best price, and the burden of administration is usually taken on by the insurer” he adds.
“Even if you’re not swapping, you should never accept an unjustified hike in price. Unless something has changed significantly at your property or you’ve had a major claim, year on year you shouldn’t be seeing your premium go up by more than about five per cent.”