When taking about a landlord insurance policy or buy-to-let insurance policy one of the most important things you need to know is the building sum insured of the property you want to insure. This is the amount of money that it would take to rebuild the property to its original standard if you had to completely rebuild it, for example in the case of fire.
It is easy to confuse the building sum insured with the property value which is a completely different figure. There are various online websites which can calculate a rough estimate of the buildings sum insured based on the size and square footage of the property, however the only way to get an accurate value of your properties rebuild value is to get a professional survey done which can prove to be quite expensive.
It is important for landlords to state an accurate rebuild value of a property when taking out landlords insurance to avoid under insuring the property. If you were to make a claim and you have insured your buy-to-let property for less than the amount it should be insured for, your insurance company may reduce the payout or even not pay out anything and repudiate the claim. This will leave you with a huge bill when carrying out the repairs.
If you do not know the building sum insured you can look for an insurance company who will allow you to have “blanket cover”. This means the building sum insured will be a set amount (usually £500,000) and if you need to make a claim they will pay out the amount you need to rebuild the property and not the total amount. This enables you to fully protect your buy-to-let property without carrying out a professional survey. However in most cases you will have to pay a higher premium than if you were to insure the property for exactly how much it should be insured for.
Landlords should remember that when taking out a landlords insurance policy it is better to over insure than to under insure the property to avoid invalidating a claim.