With an insured scheme, your landlord or letting agent keeps your deposit money in their own account for the duration of the tenancy. They pay a fee to the scheme (TDS Insured or MyDeposits), which registers the deposit and provides insurance cover. If the landlord fails to return the deposit at the end of the tenancy, you can claim from the scheme directly.
The alternative dispute resolution process works the same way as in a custodial deposit scheme. If you and your landlord disagree on deductions, either party can raise a deposit dispute through the scheme's free adjudication service. The adjudicator makes a binding decision based on the evidence.
The main difference from a custodial scheme is that, because your landlord holds the money, there's a small additional risk if the landlord becomes insolvent or disappears. The insurance cover is designed to protect you in this situation, but claiming from the scheme can take longer than a straightforward release from a custodial scheme.
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