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

Life and Style
The new Windows 10 Start Menu
tech
News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
books(and not a Buzzfeed article in sight)
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
fashionShame it had to end like that, says Alexander Fury
Arts and Entertainment
Mystery man: Ben Affleck and Rosamund Pike in '‘Gone Girl'
films... by the director David Fincher
News
Kim Jong Un gives field guidance during his inspection of the Korean People's Army (KPA) Naval Unit 167
newsSouth Korean reports suggest rumours of a coup were unfounded
Travel
Bruce Chatwin's novel 'On the Black Hill' was set at The Vision Farm
travelOne of the finest one-day walks you could hope for - in Britain
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
Arts and Entertainment
Gay and OK: a scene from 'Pride'
filmsUS film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
News
people
Life and Style
Magic roundabouts: the gyratory system that has excited enthusiasts in Swindon
motoringJust who are the Roundabout Appreciation Society?
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

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

    The children orphaned by Ebola...

    ... then rejected by surviving relatives over fear of infection
    Pride: Are censors pandering to homophobia?

    Are censors pandering to homophobia?

    US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
    The magic of roundabouts

    Lords of the rings

    Just who are the Roundabout Appreciation Society?
    Why do we like making lists?

    Notes to self: Why do we like making lists?

    Well it was good enough for Ancient Egyptians and Picasso...
    Hong Kong protests: A good time to open a new restaurant?

    A good time to open a new restaurant in Hong Kong?

    As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
    Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

    Paris Fashion Week

    Lagerfeld leads a feminist riot on 'Boulevard Chanel'
    Bruce Chatwin's Wales: One of the finest one-day walks in Britain

    Simon Calder discovers Bruce Chatwin's Wales

    One of the finest one-day walks you could hope for - in Britain
    10 best children's nightwear

    10 best children's nightwear

    Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
    Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

    Manchester City vs Roma

    Five things we learnt from City’s Champions League draw at the Etihad
    Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

    Trouble on the Tyne

    Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?