First time property insurers soon learn that buildings insurance is not only based on the property’s ‘market value’, but its ‘rebuild costs’ as well. The rebuild costs become relevant if the property is completely destroyed by an insured disaster. The costs would involve how much it would take to rebuild or reinstate your property from scratch.
Insurer Zurich has warned that some landlords are leaving their properties – and finances – exposed by incorrectly valuing these full rebuilding costs, and unfortunately it’s the complacency to blame.
Jonathon Scotcher, the Underwriting Manager for Real Estate at Zurich, warns that the financial crisis and feet-dragging economy may have quietened landlords into a false sense of security.
“People are fairly relaxed about valuations at the moment because rebuilding index values over the last few years have gone in relatively small steps.”
The result of a wrongly estimated sum is that if your property needs extensive rebuild work, your insurer will only pay the amount you have insured the building for. But obviously if this sum is incorrect, you would not receive a big enough pay-out. Smaller claims will also be reduced by the percentage your building is deemed underinsured by.
Regardless of whether you own residential or commercial properties, it’s important to get the calculations right. Here are some top tips for getting your rebuild value sums correct:
Consider all the Variables
The rebuild cost is not only dictated by the size of your building. It will also impact the amount of materials used, but you should also consider what these materials are – is it constructed from anything specific or unusual? You should also take note of the building’s style, quality and location. Not only that, but don’t forget to include the cost of labour, which will depend on the size of the project and how long it would take to rebuild from scratch.
There have been recent changes in UK building regulations, and stricter environmental laws, which could mean your buildings might cost more to rebuild in comparison to when you first insured them. Other geographical factors also make a difference, for instance, rebuilding costs will differ in the north from in the south.
Properties that are less typical, such as listed buildings, landmark buildings etc, would need the attention of specialist construction workers, and therefore need to be assessed on-site by those experienced enough to give a correct value.
Get Expert Advice
The type of building you own or what it’s used for is irrelevant, because an assessment given by a professional surveyor is the most reliable way to get an accurate insurance sum. It gives you peace of mind, because you’ll know that your insurance should provide the total rebuild cost if it was ever needed. And an important tip to remember; revalue your buildings at regular intervals to be as prepared as possible.
At Weir Insurance we will be able to put you in touch with a Chartered Surveyor, and we will provide further advice on arranging accurate Buildings Insurance. Get in touch with our experienced team to find out more.