Landlord insurance payouts decline by -33 per cent since pandemic

Market analysis from Total Landlord Insurance reveals that the average proportion of a landlord insurance claim being paid out has fallen by -33 per cent since before the pandemic.

In 2019, landlords submitted insurance claims totalling £2.5 million to Total Landlord Insurance, with fire and water damage leading the way as the most expensive claims. Of this total, £2.1 million or 86 per cent was paid out by Total Landlord Insurance.

By 2021, however, the picture had significantly changed. The total sum of annual landlord insurance claims rose from £2.5 million to £4 million, while actual insurance payouts remained steady at £2.1 million.

This means that the proportion of total claims paid was 53 per cent in 2021, a drop of -33 per cent compared to 2019.

So, while the sum being paid out has remained largely consistent, there has been a sharp increase in the sums being claimed by landlords in the first place. Indeed, the data shows clearly that Total Landlord Insurance’s payouts remained steady while the total claim sum nearly doubled.

It’s interesting to note that the biggest decline in the proportion of claims paid between 2019 and 2021 was for those related to landlord liability insurance – insurance that covers the landlord in the event that a tenant is injured inside the property.

In 2019, landlords submitted liability claims of £44,400, 68 per cent of which was paid out by the provider. In 2021, however, total liability claims rose to £125,500, of which just 8.6 per cent was actually paid – this marks a decline of almost -60 per cent compared to 2019.

It’s a similar story with storm damage claims. In fact, Total Landlord Insurance doubled the amount it paid out for storm damage claims between 2019 and 2021, but the amount being claimed rose even more, from just under £338,000 to more than £1.5 million.

Melissa Choules, Lead Claims Technician at Total Landlord Insurance, commented:

“The pandemic was an incredibly difficult time for everyone, not least landlords and tenants. The latter struggled with being locked within their homes while facing genuine concerns about health, income, and careers, while landlords had to grapple with an eviction ban even in the face of growing rent arrears and, in some cases, increasingly poor tenant conduct.

“The result of which has perhaps been larger claims than they may have made otherwise in order to reset after the impact of the pandemic. However, with extensive measures in place to protect tenants during this period, many landlords have found that the reality of what can be recouped is some way below their expectation, albeit consistent with the pre-pandemic market.”