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. 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

* Review cover regularly

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Life and Style
Couples have been having sex less in 2014, according to a new survey
New Articles
i100... with this review
Have you tried new the Independent Digital Edition apps?
Holly's review of Peterborough's Pizza Express quickly went viral on social media
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Blahnik says: 'I think I understand the English more than they do themselves'
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam