Mortgages.scot

I have come across this situation several times over the years is where someone owns a property where their parents reside in it. Many find it difficult to obtain building insurance for a reasonable cost.

I purchased a property for my parents to live in, when they tried to get insurance they were told it is was not possible for them to ensure the building as they did not own it. When I then tried to do it the quotes were outrageous and I was finding it hard to even get a policy that did not insist I have a tenancy in place. It’s for my elderly parents. No rent, no tenancy. Is this common?

I am not an insurance expert by any means, however, I have seen this situation a lot. Standard policies assume the person applying for the building insurance actually live in the property and it is either their main residence or a second home.

The risk is that if you are not the property owner then there is an increased chance the property could be damaged or at least not taken care of as well as it would if the occupant had owned it.

Of course in your case, the occupants are your parents, not just an unknown tenant. There are a couple of options that may help.

Building insurance from your home insurer

The most successful option I have seen is to approach the insurer for your own home and ask them to provide cover. They are usually more sympathetic to the situation and willing to provide cover at a more reasonable rate.

What you must do though it gets them on the phone and explain it to them rather than try and do a quote through their website.

Once many insurers are aware that immediate family reside in the property, no rent or tenancy agreement is in place, they are more willing to do a policy that in terms of pricing is more aligned to what you expect to pay if it was being insured with you living there.

Contact a broker for quotes
There are services out there that can at least help point you in the right direction. For example, You can call The British Insurance Brokers Association (BIBA) who are experienced in insurance of all types and can connect you with a suitable broker who may be able to help.

The last person I directed to BIBA was getting quotes in excess of £500 for buildings insurance in the exact same position and from a call to BIBA came away with a policy at around £220.

Buildings Insurance

Shop around but always phone for quotes
There are some insurers that are sympathetic to this scenario and are willing to give good rates. You need to call and speak to someone though, that way you can explain and ensure they understand.

Often the blanket view is that you are renting and therefore your only option is landlord insurance which is where the cost significantly increases.

Building insurance in situations like this can be problematic.

Landlord building insurance

If you are unable to find an insurer to provide a policy that covers you on sensible terms given the circumstances you may need a landlord policy. Even though you are not actually renting or have a tenancy.

You do need to be careful with these though as many will have conditions in the policy that you must have a tenancy in place. Again, you would need to call and explain the situation to ensure the insurer is aware you do not have a tenancy in place.

Avoid using comparison sites

When using sites such as GoCompare or Compare The Market you should be cautious as they tend to make general assumptions that likely do not apply to your situation. Again this includes things like you will be the occupant or you will have a tenancy.

For anyone that is a landlord in the standard sense or intending to become one, you may find my BTL guide useful.