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Monday, April 23, 2012

Landlord Insurance - 'trap'

I met a fellow landlord in my Virgin gym this week. He highlighted an issue he had with his landlord insurance. Interestingly it was the complete opposite to my issue with my landlord insurance company.

He had bought a buy-to-let property in Hull several years ago with a Mortgage Express mortgage. Recently the property had been broken into and suffered £5,000 worth of damage. The property was insured but he had not increased the sum insured since the purchase of the property. The original re-build cost was in the order of £80,000. The insurance company has come back and is now arguing that the sum insured should be now £120,000 and that they will only pay out pro-rata on the £5,000. This seems to me to be very 'harsh'.

Has anybody come across a similar situation.? My fellow gym goer maintains that he has been caught out by ignorance rather than actively trying to under insure his buy-to-let property.

Looks to me that us landlords are at risk of get caught in a 'pincer movement' by these landlord insurance companies.

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SIan said...

I hadn't actually thought about under insuring as being such a big issue!

I too was looking to insure my let properties recently; after speaking with several insurers not one asked me any other questions except the value of what I wanted to insure. Now you have got me thinking; if I have got the valuations wrong I won't know unless something like this happens. I wasn't warned about under insuring and how it might affect the policies.....there is also a wider issue regarding insuring your own home ........certainly food for thought....

letting-in-scotland said...

Yes - I think I've read of this before, plus i'm fairly sure one insurance company pre-warned me of this when taking out insurance.

Paul Barrett said...

There is no difference for residential or BTL property.
EVERY renewal date you have to ascertain the rebuilding cost of the property; not the value , and insure for that amount.
RICS give a figure on their website.
YOU DO NOT insure for value ever, it is the rebuilding cost you insure for.