Landlord insurance - why rebuild costs are important?

Many landlords that are looking to insure their their buy-to-let property will look to insure their property for an amount similar to what they think it is worth. This on the face of it seems a logical way of proceeding.

The reality is if a landlord insures their buy-to-let property for it's current value then they will be over insuring their property.

The reason is because they only need to insure the property for the rebuild cost. Most properties value is contributed significantly by the value of the land on which the building sits. Typically 25-35% of the value of a property relates to the value of the land.

Therefore, a landlord needs to use a specialist website such as the one by the Association of British Insurers (ABI) This site has a rebuild calculator build into it allowing a landlord to calculate the rebuild cost for their buy-to-let property.

The other thing a landlord should note is that rebuild costs vary across the country, being highest in London. The calculator with use the postcode relating to a landlords buy-to-let property to make this regional adjustment.