Landlords are fast ditching cash deposits in favour of insurance against tenants defaulting says Credit & Guarantee.

The insurer reports sales of its landlords' insurance policy has risen by more than 100% in the last six months alone, as insurance becomes an increasing alternative to a cash-based deposit for landlords.

It has written cover for more than £160m worth of commercial property since May 1999.

C&G's policy offers cover the equivalent to up to five times a tenant's annual rent.

The policy insures against interrupted cash flow by clearing arrears and reinstating rental income following a tenant's insolvency.

The minimum annual premium on the policy is £1,000 plus insurance premium tax.

Malcolm Jamieson, property indemnities manager at C&G, said: “We predict insurance will become a standard requirement in place of, or in tandem with, cash deposits as investors, lenders and property professionals increasingly recognise the greater benefit of insurance, against tenant failure over traditional rent deposits.”