Building Insurance – How Much Cover Do You Need?

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Many property owners still widely hold the belief that the market value of their property is the amount that they should insure their property for. Rarely will you find that the market value is the same as the rebuild cost of the property, which could leave the property owner under insured in the event of a claim. It is therefore extremely important that you insure your buildings for the reinstatement cost rather than the market value.

How Do I Determine My Buildings Sum Insured?

The basis of a building’s reinstatement valuation is that the assessment will include all the items excluding the owner/tenant’s contents. Specifically, valuations will include:

  • Kitchen Fittings and Appliances
  • Outbuildings
  • Garages
  • Fences and Gates
  • Paths/Driveways
  • Swimming Pools (Including Heating and Filtration Equipment)
  • Site Clearance
  • Architects, Engineers and Surveyors Fees.

The rebuilding cost will be the cost of demolishing and clearing away the existing structure (including the items referred to above) and rebuilding it to its existing design in modern materials, using modern techniques, to a standard equal to the existing property and in accordance with current Building Regulations and other statutory requirements.

It is important to keep in the mind that although a rebuild valuation will specify the rebuild cost as of the date of valuation, you should always make allowance for cost inflation when determining the actual sums insured. Costs are likely to rise during the currency of the policy and this should be allowed for when setting the sum insured.

Most policies however allow for buildings sums insured to be adjusted automatically either by index linking or through a ‘day-one’ basis of cover.

Average Clause

If your property is not insured for the correct amount, you may fall foul of the ‘average clause’ within your policy wording. The below video by Rebuild Cost Assessment explains this in full detail:

Benefits Of A Building Reinstatement Valuation

Many buildings are underinsured. A reinstatement cost assessment significantly reduces the risk of underinsurance and resultant financial penalty.

  • In the event of a claim, the insurer or loss adjuster can immediately focus on the claim rather than an underinsurance issue, which might delay the repair process and lead to unrecoverable increased costs.
  • The insurer receives and the policyholder pays the correct premium, being neither under nor over insured.
  • Good corporate governance for commercial risks
  • Buildings of historic or environmental value can be restored without being lost to the wider community due to lack of funds.
  • Peace of mind to all parties of the insurance contact

How Do I Organise A Buildings Reinstatement Assessment?

There are three routes that we suggest:

  • Seek the advice of a qualified surveyor who will be able to arrange this for you.
  • Visit the Rebuild Cost Assessment Rebuild Cost Assessment offer an online service report guiding you on how much you should insure your building for. You can use our exclusive discount code, JHL20, in order to receive £20 off the price of a desktop assessment.
  • Visit the Barrett Corp Harrington (BCH) website. BCH specialise in providing insurance reinstatement assessments for all types of buildings: no matter how large or small. To organise a valuation or if you would like a no obligation discussion of your specific requirements, contact the BCH team.