8:32 AM, 9th August 2012, About 11 years ago 16
I have received an email from one of our readers who has a Landlords Insurance Dilemma and I’m not confident enough to answer his question absolutely. If you can help please comment below, no blatant advertising though please. I will not approve comments such as “Call XXX on YYY I am an insurance broker and I can help”. However, I will approve useful comments which answer the question in detail.
“I am in the army so I have a pretty busy day job. I purchased a property for just under a million pounds in London and hopefully one day I will live there – the yield is rubbish but I’m optimistic about capital growth. As I said, I want to one day justify living in it – so it was bought with the heart not the head!
I have landlord insurance on this property, however I am concerned as I have a residental mortgage on it. My first concern is that that any claim I ever try to make on the landlords insurance might lead to the mortgage company knowing that I’m letting it and either calling in the mortgage or increasing the mortgage rate (perhaps even asking for retrospective payment from the rent money I already received). More importantly though, could the insurance company refuse to pay out if they find out that I don’t have permission from my mortgage lender to let the property?
I hear it’s quite common for people to have buy to let properties on residental mortgage which, if I’m right may also mean that their property is uninsured, even if they have purchased landlords insurance.
I do intend to change my mortgage but I want to wait until its fixed initial two year period is over – however maybe I should try to do this before this point as I am pretty sure my landlord insurance will not cover any claim on a property that has a residential mortgage. At the end of the day, insurance companies do tend to have a reputation for looking for any reason not to pay out!
Any advice / help you can give would be wonderful and I’m happy for you to make a blog out of this issue of residental mortgage & landlord insurance if you want.
I can’t see why an insurance company could dispute a claim on the basis that the landlord doesn’t have permission to let from his mortgage provider. as I said in the introduction to this article though, I wouldn’t want to stake my reputation on that.
What do you think?
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