A landlord with an insufficient insurance policy has been left out of pocket by £100,000, an event insurers say shows the importance of checking policy amounts.
The incident involved a fire at a block of flats started by accident when a tenant cleaned car parts in a kitchen using petrol. That led the insurer to make a claim of almost £400,000 only to discover his cover level was insufficient and had been so for many years.
Total Landlord Insurance, which settled the claim, warned landlords to double-check their Landlords insurance policies: firstly to check they've kept up to date with increasing property values, and secondly to make sure they've had a professional valuation on the worst case scenario of a total property rebuild.
Getting the cover level right isn't just a case of preparing for the worst. Landlords who make smaller claims that are well below their cover level might not get the full amount if the property is underinsured: most insurers reserve the right to reduce payouts proportionally in these situations.
Insurers also warned that although meeting electrical safety checks is vital to mitigate risk, more than a third of claims result largely or solely from tenant behavior such as kitchen fires, smoking or burning candles.
