Pandemic Aftershock: landlord insurance pay-outs decline by -33%

The pandemic has had lasting effects on the property sector and market analysis from Total Landlord Insurance discloses that the average proportion of a landlord insurance claim being paid out has dropped by -33% since the pandemic.

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.”

A look at history for answers

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

By 2021, however, the picture had significantly changed as the total number of annual landlord insurance claims rose from £2.5 million to £4 million, while actual insurance pay-outs remained stable at £2.1 million.

To this end, the proportion of total claims paid was 53% in 2021 – a drop of -33% compared to 2019.

Telling data

So, while the sum being paid out has remained largely consistent, there has been a sharp spike in the sums being claimed by landlords in the first place.

Indeed, the data clearly depicts that Total Landlord Insurance’s pay-outs remained steady while the total sum nearly doubled. Interestingly, the biggest noticeable decline in the proportion of claims paid between 2019 and 2021 was for those to landlord liability insurance which is insurance that covers the landlord in the event that a tenant is injured inside the property.

Landlords submitted liability claims of £44,400 in 2019, where 68% of which was paid out by the provider. However, in 2021, total liability claims rose to £125,500, of which just 8.6% was actually paid – marking a decline of almost -60% compared to 2019.

Things rings true for storm damage claims as well, in fact, Total Landlord Insurance double the amount it paid out for storm damage claims between 2019 and 2021, yet the amount being claimed rose even more, from just under £338,000 to more than £1.5 million.