Underinsuring a property asset has significant financial implications for a property owner. If the reinstatement figure is calculated inaccurately or has not been updated regularly every three years, there will be insufficient monies to rebuild the property.
- Have a full assessment done by a Chartered Quantity Surveyor to find out the correct reinstatement value of the estate/building at least every 3 years (as recommended by the Royal Institution of Chartered Surveyors (RICS).
- Make the insurer aware of any changes made to the estate/building such as an extension, any improvements or replacements or indeed business changes, for example new machinery or technology in the building.
- Make sure the insurance cover is based on what it would cost to rebuild the estate/building not what the market value of the estate/building currently is.
- If a property is a listed building and/or in a conservation area, it will require special consideration. The time and cost of the repairs/rebuilds are likely to be far greater.
- Make the insurer aware of all the assets the estate/building has in order to ensure everything is fully covered.
- Remember to factor in the cost of professional fees such as for Consultants, Architects, Surveyors or Structural Engineers in the event of a loss.
- Following the updated Brexit rules it is important to be aware of the impact of currency fluctuations and the affect it has on your sum insured.
- Check the VAT status as some building’s reinstatement might attract VAT whiles others might not and the position can vary.
- Insure everything: Contents should be insured for their new replacement value and the value should be sufficient to cover all of the contents.
- Ensure an understanding of the ‘average clause’ which is where a declared value is deemed to be under assessed and the claim amount is reduced by the same ratio.
For further information and expert advice please contact: Joe Moran, Head of Reinstatement Cost Assessments at firstname.lastname@example.org or call + 44 (0) 7917 797 097.