86% of properties surveyed in research carried out on behalf of Aviva Insurance were found to be significantly underinsured, which has led letting specialist Leaders to issue a warning to landlords about the risks they face if their properties are not insured to the full reinstatement value.

As Hepburns Insurance Services Ltd Business Development Manager, working exclusively with Leaders, Charles Foster explains: “In the event of a claim, if you are found to be underinsured, most insurers will apply ‘average’ allowing them to reduce any payments. For example, if a flood or fire caused £75,000 of partial damage and the property is insured for £200,000, but its true reinstatement is £300,000, this would equate to being 1/3rd underinsured. Applying average this 1/3rd will be taken off your claim and the insurer would then payout a maximum of £50,000.

This would leave the property owner with an underinsurance shortfall of £25,000.

“The current economic climate has led to reductions in the market values of some buy to let properties. Whilst property owners may be looking for savings during these times, it is important that this is not at the expense of insurance cover.”

Leaders advise that generally property sums insured should represent the cost of reinstatement to the existing specification. Ancillary costs should be considered, for example sums insured of buildings should make allowance for items such as demolition, debris removal and professional fees, as required.

Particular buildings may also require additional or unusual costs to be incurred for specialist reasons, such as compliance with Public Authorities regulations, for example, listed buildings or buildings containing asbestos material necessitating removal by approved contractors. For guidance on rebuilding costs there is no substitute for the advice of a qualified surveyor. However, you can check the adequacy of your existing sums insured by visiting www.bcis.co.uk/rebuilding

“In addition,” says Charles, “whilst making sure you have adequately insured your buildings it is also as important to remember that when you’re letting your property to tenants a standard home insurance policy will often exclude let properties. For this reason a specialist landlord insurance – which includes landlord liability cover – is vital if you own a rental property. Leasehold landlords should also be advised to take a contents policy which includes liability cover.”

Leaders in partnership with Hepburns Insurance Ltd have designed a specialist landlord policy which will provide you with all the cover you need for your rental property. Contact Hepburns today to discuss your insurance requirements in more detail Tel: 01534 515151 Email: hisl@hepburnsinsurance.com.