Buy-to-let  

Small buy-to-let investors at risk of ‘inadequate’ insurance

Meanwhile, other firms include landlord insurance as standard in buy-to-let investment conversations.

Nailsworth and Cirencester-based broker at Hudson Rose, Graham Taylor, said his firm will always advise landlords to take out appropriate insurance to protect their investment. 

“There are few investments where a third party (in this case, a tenant) can damage your return so directly, so it makes sense to protect yourself,” Taylor told FTAdviser.

“The alternative might be to self-insure if landlords are fortunate enough to have built cash reserves, but most landlords will view the insurance as a necessary business expense and factor this into their calculations.”

‘Landlords need to consider protection’

Insurance providers such as LV are beginning to help renters amend their level of cover for income protection so they are better able to deal with changes in rental payments, but little is being done to target individual landlords.

London-based broker at L&C Mortgages, David Hollingworth, said his firm tries to promote landlords to consider protection.

“On the protection side, we do look to engage with buy-to-let customers and it makes sense to think about protection from the point of view of the individual and their overall situation, rather than be driven from the type of mortgage we are arranging,” Hollingworth explained.

“It can be hard to get landlords to think about it, but important to try as they may have other mortgages, family and a reliance on the income generated so looking at the rounded picture makes sense.”

The brokerage also provides an option for landlords on the general insurance side, giving buy-to-let clients access to more specialist advice.

Hollingworth added that life insurance can be a “difficult thing to crack” as people can be resistant and in the context of buy-to-let landlords are even less inclined because they don not see it as part of the personal profile they need to protect.

ruby.hinchliffe@ft.com