Landlord Insurance - Knowing your Building Sum Insured
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One of the main things that you will need to know when you are looking at getting either a Landlord Insurance Policy or a Buy to Let Policy is the Building Sum Insured of the property that you are looking to insure. Basically this is the amount of money that in the worst case scenario it would take to completely rebuild the property to the same standard as it currently is.
Many people that try and get a quotation mix up the Building Sum Insured with the Property Value which are actually 2 totally different figures. You can get a rough idea of your Building Sum Insured from various places online where there is a rough calculator usually based on the size and square footage of the property but the only way for you to find out the true value of your properties rebuild cost is to get a professional survey done which can be quite expensive.
If you insure the property that you are renting out for less than the amount that it should be insured for then it could cause problems if it ever comes to you having to make a claim especially if it was to totally rebuild the property. For example if you were to under insure the property by say 20% then the insurers may reduce the payout on a claim by the same percentage or in the worst case scenario may not pay out anything at all and repudiate the claim.
There are certain options that are available if you want to insure a property that you rent out and you are unaware of the Building Sum Insured then what you can do is look around and find an insurer that will allow you to have something that is called a blanket cover. This type of cover will generally give you a set amount (usually £500,000) for the Building Sum Insured although if you do have to make a claim then obviously they will only pay you out the amount that you need to rebuild the property and not the total amount.
This can work both ways as it can make sure that you are fully insured without knowing the correct details and can also ensure that if the worst was to happen then your property would be fully rebuilt but obviously you would be expected to pay a higher premium than if you insured it for exactly how much you need to insure it for. Just remember that if you don't know the rebuilding cost then it is better that you over insure than under insure and risk invalidating a claim.
