Flats fire cost under insured landlord £400,000


A £400,000 fire raged through a block of flats destroying much of the building – only for the landlord to find the property was underinsured by more than £100,000.

The insurer settled the lower claim – but realised the landlord had failed to update his rebuild costs for several years.

Industry figures blame most fires on electrical faults (65%), while 20% are caused by kitchen fires, 10% by smoking and 5% by candles.

Insurers are now urging buy to let landlords and property investors to check rebuild values on buildings insurance to make sure they are fully covered.

Rebuild costs can depend on a wide range of factors – from the size of the property to constructions materials.

The figure is different from the property valuation as the cost of the land the building stands on is not included – but site clearance costs are.

Rebuild costs are often included on a mortgage valuation – but need to be updated every year. some insurers do this automatically through index linking, while some rely on the client to let them know about any changes.

A useful calculator endorsed by the Royal Institution of Chartered Surveyors (RICS) and the Association of British Insurers (ABI) is online at the Building Cost Information Service web site

“It is recommended that a flat or maisonette is insured together with the other flats or maisonettes that make up the block, under a single policy arranged for the whole block,” advises BCIS.

“This will avoid complications which may arise if units are insured individually, and will also ensure that you have the widest possible cover available, eg for common parts, which may not be available under an individual policy.

“If it is not possible to insure the block then you may be able to take out a policy on an individual flat. To calculate the rebuilding cost of a block of flats you should seek professional advice.”

For great deals on Landlords Insurance visit www.quotelinedirect.co.uk

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