If you have a mortgage on your property, either as a buy to let landlord or an owner occupier, the chances are that your mortgage provider will have made buildings insurance cover a mandatory part of your loan agreement.
The cover your lender requires protects them against the risk of the asset you used to secure your loan (your property) being destroyed or so badly damaged that it is not worth as much as the loan outstanding on it. As the owner of the property though, you may have a bit more to think about when it comes to making sure that you have appropriate property insurance in place:
- the amount of cover your lender requires may not be reflect the actual costs of completely rebuilding your property should the worst happen - buildings cover should also typically include costs of demolition, site clearance, legal searches, architects and planning fees and the like;
- you also need to include a realistic figure to cover the costs of replacing your fixtures and fittings;
- if you are looking for contents cover as well, then it may be a good idea to go through every room taking a careful note of its contents and their value - you may be surprised at the total you come to;
- don't forget to make a special note of the most expensive individual items that you may wish to cover, as these may need to be listed separately on your policy;
depending on your property and contents, you may wish to consider market value replacement cover rather than new for old;
- if you are using figures that you worked out some time back, remember to make some allowance for inflation in your calculations;
- it is important from the outset not to get too hung up on the price of your cover - it is far more important to get the protection that you need;
- if your property, fixtures, fittings and contents have been undervalued to keep premium costs down, then you'll typically find that you will be facing an equivalent shortfall in any claim settlement - a funding gap that you will need to fill from your own resources;
- at UKinsuranceNET we are only too aware of all these things and will be only too pleased to help you avoid trouble through our expertise. We'll help you correctly assess the value of your asset to ensure that you find the policy which gives you the optimum balance between cost and cover provided;
Following a claim on a policy, the last thing any property owner needs is the realisation that the claim settlement is not going to cover the actual costs involved to put things right.
That few pounds saved on premiums through underinsuring when trying to keep costs down, may turn out to have been a bit of a false economy.