Run for cover: Buy-to-let home insurance

Will your buy-to-let home insurance weather a tempest, asks Chris Partridge

The stormy weather this month has been a stark reminder to many buy-to-let investors of the importance of having proper house insurance cover. Jane Milne, head of property insurance at the Association of British Insurers, says that after such widespread damage: "The cost will be several hundred million pounds, and it is likely that many landlords have suffered."

Homeowners have become blasé about storms because they occur so rarely. The last really destructive storms were back in 1990. "We have forgotten that it can be like this, but we do expect that with climate change, storms will get more frequent and more violent," adds Milne.

Landlords who hold properties for the long term are at risk of becoming under-insured as time goes by. "All of us need to review our insurance, especially if you have owned the property for some time, as costs may have changed," she says. The most common insurance mistake is false economy, skimping on coverage and suffering as a consequence.

But as Andrew Thompson, of the Building Cost Information Service (BCIS), points out, paying too little is not the only mistake. Many buy-to-let landlords, he says, are paying too much. "Homeowners need to insure their homes at the rebuild value, not the market value," he says. Even if a house is destroyed, the plot of land is retained, so the cost of rebuild is lower than the home's market value.

Insuring for the cost of rebuilding rather than the cost of buying another property can bring substantial savings in premiums. "Knowing the rebuild value means you may be offered better insurance rates because the insurer can assess its risk exposure better," Thompson says. "These latest storms should prompt people to check their buildings insurance policy and get it right when it's time to renew again."

But how does the average landlord estimate the rebuilding cost without bringing in expensive professional advice? Simple: the BCIS, which is part of the Royal Institution of Chartered Surveyors, has a free online rebuilding cost calculator at calculator.bcis. co.uk. To use the calculator, you need to know the outside dimensions of the house, and roughly when it was built. The calculator will give a figure for the common types of house from terraced cottage to executive detached home.

The calculator does have limitations, covering only standard, brick-built houses of average size. Stone palaces, blocks of flats and listed buildings must be professionally assessed.

Thompson has personal reasons for recommending the calculator. "My fence blew down in the storm, and it made me think that things could have been much worse if something serious had happened to my home and I didn't have the right insurance cover," he says.

Many buy-to-let landlords with larger portfolios will not be claiming for storm damage because of high excess levels, says Chris Town, chairman of the Residential Landlords Association.

"One of the issues is that large excess levels mean that minor damage has to be covered by the landlord," he says. "My own portfolio carries an excess of £5,000, so I will only claim for major damage. I regard lost tiles as a maintenance issue."

The storm also highlights the necessity of getting specialist insurance for tenanted property, and not relying on ordinary domestic house insurance. "A house-owner must inform their insurer and their mortgage lender if the house is let out," says Malcolm Harrison of the Association of Residential Letting Agents.

The financial consequences when things go wrong in a house are far worse when a tenant is involved, Harrison points out.

"Supposing a tenant slips on the steps - they can sue the landlord. If there is a major leak you might have to put the tenant up in a hotel while repairs are made - does the policy cover that?" he says.

If disaster strikes and the house is wrecked, the tenant will have to be rehoused and the income will be lost as well, so buying a specialist landlord's policy that covers these eventualities is essential, Harrison advises.

Storm shelter

* Buy a landlord's policy - do not rely on ordinary domestic building insurance

* Ensure cover includes rehousing tenants

* Estimate cost of rebuilding at calculator.bcis.co.uk

* Review cover regularly

News
people
Life and Style
healthMovember isn't about a moustache trend, it saves lives
News
people
Life and Style
food + drinkFrom Mediterranean Tomato Tart to Raw Caramel Peanut Pie
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Armstrong, left, and Bain's writing credits include Peep Show, Fresh Meat, and The Old Guys
TVThe pair have presented their view of 21st-century foibles in shows such as Peep Show and Fresh Meat
Arts and Entertainment
Keys to success: Andrew and Julian Lloyd Webber
arts + entsMrs Bach had too many kids to write the great man's music, says Julian Lloyd Webber
Arts and Entertainment
Hand out press photograph/film still from the movie Mad Max Fury Road (Downloaded from the Warner Bro's media site/Jasin Boland/© 2014 Warner Bros. Entertainment Inc.)
films'You have to try everything and it’s all a process of elimination, but ultimately you find your path'
Extras
Boys to men: there’s nothing wrong with traditional ‘manly’ things, until masculinity is used to exclude people
indybest13 best grooming essentials
News
i100
Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films
books

New essay by JK Rowling went live on Pottermore site on Friday

News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
news

New UK station Russia Today gives a very bizarre view of Britain

Arts and Entertainment
Keira Knightley and Benedict Cumberbatch at the premiere of The Imitation Game at the BFI London Film Festival
filmsKeira Knightley tried to miss The Imitation Game premiere to watch Bake Off
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    The benefits of Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Trainee Recruitment Consultants

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Finance Assistant - Part time - 9 month FTC

    £20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

    Marketing Manager

    £40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

    Day In a Page

    Bryan Adams' heartstopping images of wounded British soldiers to go on show at Somerset House

    Bryan Adams' images of wounded soldiers

    Taken over the course of four years, Adams' portraits are an astonishing document of the aftermath of war
    The drugs revolution starts now as MPs agree its high time for change

    The drugs revolution starts now as MPs agree its high time for change

    Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
    The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

    Gotcha! The camera is turned on tabloid editors

    Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
    Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

    Fall of the Berlin Wall

    It was thanks to Gorbachev that this symbol of division fell
    Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

    What makes ouija boards and demon dolls scary?

    Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
    A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

    Rose Rouse's safari in modern Britain

    Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
    Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

    'My world of no smell and odd tastes'

    A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

    Matt Parker is proud of his square roots

    The "stand-up mathematician" is using comedy nights to preach maths to big audiences
    Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

    Paul Scholes column

    Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
    Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

    Frank Warren column

    Call me an old git, but I just can't see that there's a place for women’s boxing
    Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

    Adrian Heath's American dream...

    Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
    Simon Hart: Manchester City will rise again but they need to change their attitude

    Manchester City will rise again but they need to change their attitude

    Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
    Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

    A Syrian general speaks

    A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities