As a landlord, it’s your responsibility to ensure your rental property is adequately insured. But one of the most critical aspects of getting landlord insurance right is determining the rebuild cost. This is the amount of money it would take to completely rebuild your property from scratch if it were destroyed by fire, flood, or another covered event.
Why is this important?
The rebuild cost is crucial because it directly impacts your insurance premium. If you underestimate the rebuild cost, you’ll be underinsured, and your insurance company won’t cover the full cost of rebuilding your property in the event of a claim. Conversely, if you overestimate the rebuild cost, you’ll be paying unnecessarily high premiums.
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How to work out the rebuild cost
There are several ways. Here are a few options:
Use a rebuild cost calculator:
Several online rebuild cost calculators can give you an estimate based on your property’s type, size, and location. While these calculators can be a helpful starting point, it’s crucial to remember that they may not be entirely accurate.
Get a professional valuation:
The most accurate way to determine your property’s rebuild cost is to hire a professional surveyor. They will visit your property and take into account all the relevant factors, such as the construction materials, size, complexity, and any unique features.
Check your existing policy:
If you already have landlord insurance, your policy documents may include the rebuild cost of your property. However, it’s important to ensure this figure is still accurate, especially if you’ve made any renovations or improvements to the property.
Here are some additional factors to consider:
- The type of construction: The cost of rebuilding a brick house will be different from rebuilding a timber-framed house.
- The size and complexity of the property: A larger and more complex property will naturally be more expensive to rebuild.
- The location of the property: Building costs can vary depending on the local area.
- Any unique features: Does your property have any unique features, such as a swimming pool or a listed building status? These can also affect the rebuild cost.
Tips for keeping your rebuild cost accurate
Review your rebuild cost regularly:
It’s a good idea to review every year or two, especially if you’ve made any renovations or the property has increased in value.
Inform your insurer of any changes:
If you make any changes to your property that could affect the rebuild cost, be sure to let your insurance company know.
Consider index linking your policy:
Some insurance companies offer index-linked policies, which automatically adjust the rebuild cost for inflation. This can help you avoid the risk of being underinsured in the future.
By following these tips, you can ensure that your rental property is adequately insured and that you’re not paying more than necessary for your landlord insurance.
In addition to the tips mentioned in the article, here are a few other things to keep in mind:
- When using the cost calculator, be sure to enter all the accurate information about your property. This will help to ensure that the calculator provides you with a more accurate estimate.
- If you’re considering getting a professional valuation, be sure to get quotes from a few different surveyors before making a decision.
- It’s also important to remember that this is just one factor that insurers consider when calculating your premium. Other factors, such as your claims history and the level of cover you choose, will also play a role.
By taking the time to understand this and taking steps to ensure your property is adequately insured, you can give yourself peace of mind knowing that you’re protected in the event of a disaster.