If you’ve ever insured a property, you’ll know that arranging buildings insurance is based on your property’s rebuild costs – not its market value. This refers to the amount of money it would cost to rebuild or reinstate your property from scratch, if completely destroyed by an insured peril.
Insurer Zurich has warned that some landlords are leaving their properties and finances – exposed. Incorrectly valuing these full rebuilding costs and it’s complacency that’s to blame.
The financial crisis and subsequently sluggish economy may have lulled landlords into a false sense of security, warns Jonathon Scotcher, Underwriting Manager for Real Estate at Zurich. “People are fairly relaxed about valuations at the moment because rebuilding index values over the last few years have gone in relatively fairly small steps,” he said.
Your insurer will only pay out the amount you have insured the building for. So if you wrongly estimate the sums insured, and your property needs extensive rebuild work, you would not receive a big enough payout. Smaller claims will also be reduced by the percentage your building is deemed underinsured by.
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
It’s not just the size of your building which dictates its rebuild cost which impacts the amount of materials needed. Consider whether it is constructed from any specific or unusual materials? Also consider the building’s style, quality and location. 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.
Recent changes in UK building regulations may mean your buildings cost more to rebuild than when you first insured them. Other geographical factors also make a difference – rebuilding costs will differ in the north from in the south, for example.
GET EXPERT ADVICE
An assessment by a professional surveyor is the most accurate way to arrive at a sums insured. This gives you the peace of mind that your insurance would cover total rebuild cost if it was ever necessary. You should also revalue your buildings at regular intervals to protect your investment.
Once you get your rebuild figure in order, get in touch with our experienced team about Property Owners Insurance. We will help find a policy that is right for you and your needs. Call us on 01527 874092 to find out more or get an instant quote here.