Buildings insurance: are you properly covered?

Extreme weather events seem to be occurring more frequently. Sadly, there have been a number in the world recently.

The Mediterranean has sweltered in record temperatures, with several southern European countries experiencing wildfires.

At the same time, there have been periods of unprecedented rainfall causing devastating floods in Greece and elsewhere.

In the UK, weather experts say heatwaves are likely to become longer and more intense while torrential rain and storm warnings will become more commonplace too.

The Great Storm of 1987, which hit Portsmouth and other parts of the southeast so badly, was considered a once-in-a-generation event.

But a generation is 25 years – and 1987 was 36 years ago!

There is a clear message here for homeowners and landlords, and that is to make sure you have building insurance coverage for storm damage and that the property’s repair or rebuilding cost is accurate.

Remember, the repair or rebuilding cost is not the same as the property’s value or sale price and with the recent rise in build costs, it is important to keep things up to date.

In our view, insurance is an essential aspect of property ownership. While higher mortgage rates, tax changes and other reforms in the rental sector have put financial pressure on landlords, knowing you have appropriate insurance in place at least offers you reassurance if the worst happens.

Here are some key points for landlords to consider about buildings insurance:

Understand your responsibilities. Buildings insurance is generally the responsibility of the landlord, not the tenant. The property is, after all, your asset and in most cases your most valuable one.

Landlord insurance is similar in many ways to standard home insurance but with aspects tailored to the prospect of others living in the property other than you as owner.

Buildings cover will tend to be part of a wider policy that may also include contents or fixtures and fittings insurance, property owner’s liability, accidental damage, home emergency cover and rent guarantee if a tenant defaults.

If you have a mortgage on the property, the mortgage provider will require you to have buildings insurance in place. That will usually include loss of rent cover as standard. This protects you against lost rental income after a claim if a tenant has to vacate the building during repair work.

Even if you have no mortgage and own the property outright, we still recommend having buildings insurance to protect your investment in the property.

Buildings insurance will also include public and property owners’ liability. This protects you from claims for injury to an individual – for example, if someone trips over a broken floorboard – or damage to another person’s property.

In the case of leasehold properties, it’s the freeholder who is generally responsible for buildings insurance. But if you are the leaseholder, it’s still best to check just in case. You can’t put a price on peace of mind.

Do your homework and shop around. If you are preparing a property for rent for the first time, there will typically be much to do and many upfront costs to consider. It’s therefore tempting to go for the cheapest insurance deal you can find. But this can be a false economy. You need to safeguard your financial investment by fully understanding what is and is not covered in a policy.

As well as weather events such as flooding or storm damage, buildings insurance can cover you if the property is damaged by accident, fire, other water damage or vandalism. It is also important to ask your insurer whether costs related to the displacement of tenants are covered when not the result of a direct issue with your building. This could be, for example, a dangerous structure, gas leak or other issue with a nearby property.

Here at Chinneck Shaw, our message to landlords is that we partner with a number of insurance brokers and are happy to put you in touch with one that will work for your property and circumstances. They can also provide desk-based rebuild costs to ensure the policy covers the cost accurately.

Our highly experienced Lettings and Property Management Team can help you with any questions you may have. Feel free to contact us on 023 9282 6731 or visit our ‘Let’ pages.

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