Keep that rental property insured as economic downturn continues

The slowdown in the economy is causing the cost of living and unemployment to rise and this means that an increasing number of tenants are falling on harder times and are becoming unable to meet their financial commitments.

According to HomeLet one of the UK's major Landlord and Tenant insurance providers, in 2007 HomeLet paid out £2.7 million in Rent Guarantee claims and they are anticipating a higher figure for 2008.

Landlords who don’t take out comprehensive insurance policies to protect their rental income run the risk of incurring rental arrears and even legal fees.

Another insurance provider Let Insurance Services has also recently said that the fear that the credit crunch will lead to higher premiums may deter some landlords from covering themselves against the risk of defaulting tenants even though possession claims on rented homes are rising.

This could prove to be a false economy as the lettings market has increased, but there is rising unemployment and falling rents in some areas.

Philip Suter of jml-Property-Insurance.co.uk has been saying for some time "Insurance is one essential you can't afford to be without today. Whether you are a Landlord or Tenant you must make sure your possessions are properly covered and you need to go to a specialist rental insurance provider for this".

Many Landlords and Tenants insurance policies can be arranged on line and costs for a landlord work out on average between 1.5 per cent to 3 per cent of the monthly rental income.

What a lot of Landlords don't realise of course is the fact that insurance expenditure can be offset against their income tax liability for the rental property.Many tenants of course go out and by expensive computers, ipods, cameras and televisions and might consider taking out an extended warranty, but completely forget to actually insure them and their other possessions thinking no one will ever break and steal their belongings.With some policies, a tenant can even take out cover against damage to the landlord's property so if they accidentally spill coffee or wine on the carpet or settee they can claim for this instead of loosing a large junk of their deposit at the end of the tenancy.

One provider, HomeLet also has a "Landlords Portfolio" policy. This means as there are more and more landlords with several properties, they can gain advantage of having their portfolio covered at more advantageous premium.