buildings insurance

Most houses and other properties are insured against fire, flood, accident, subsidence and other damage. 

How much should I insure for?

Many householders purchase their property using mortgage finance.  The bank or building society valuer assesses the reinstatement cost for insurance purposes, and insurance cover at this level is made a condition of the mortgage advance.

Insurance companies often increase the level of cover each year by index-linking the original insured sum from the date of purchase.

Over time such index-linking may result in a property being over-insured or under-insured ie at sums which exceed or are less than the up to date reinstatement cost.

Should the sum insured be reassessed?

Clients who purchased their home without the need of mortgage finance would not have received the mortgage valuer’s advice as to reinstatement cost.

Many will have insured for a sum equal to the purchase price.  In many cases this sum exceeds the reinstatement cost.

In some cases the reinstatement cost is greater than the market value.  An example is an old building which should be insured for the cost of reinstatement as the building exists.  This often costs more than constructing a modern building.

In other cases the cost of reinstatement is far lower than the market value which includes the market value of the land as well as the building.

Does under or over insurance matter?

If you are, say, 25% over-insured then premiums will be 25% greater than is required and, in the event of a claim, insurers will pay only up to the true reinstatement cost and not the sum insured.  The additional premium for the over-insurance may total a large sum over the period of your ownership. 

If you are, say, 25% under-insured you are at risk of a substantial loss.

In the event of a full loss the insurer will pay out 25% less than the true reinstatement cost ie the payment will be limited to the sum insured.

In the event of a partial loss ie a fire which destroys only the kitchen or a flood which damages only the ground floor, insurers will 'pro rata' a payment ie will pay only 75% of the cost of reinstatement.  

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Areas of 'unstable sub-soils'

Most buildings insurance policies include cover against subsidence.  Premiums vary depending upon sub-soils.  An insurer will charge a higher premium for a property founded on shrinkable clay than it would for one founded on granite because of the risk differential.

This type of risk is rather crudely assessed by postcode.  If there is unstable sub-soil within your post code area then premiums will be up-rated, even if your particular property is founded upon stable sub-soils.

We are able to report upon the make-up of the sub-soil in your specific location by reference to geological records.

Our reinstatement cost assessment service

We assess the reinstatement cost of modern commercial and residential buildings for clients at a relatively low cost.
 
We would need to inspect the property both internally and externally.

If your policy is not presently due for renewal we will update our assessment six weeks prior to your renewal date at no additional charge.

We provide a further annual update service and will contact you six weeks prior to your policy renewal date.  If you wish to proceed we will carry out a desktop reassessment using the information obtained on our first inspection. There would be an additional charge for this.

If your property has been extended since our first inspection then we will need to inspect again.

Period, historic and listed buildings

We assess period, historic and listed buildings for insurance purposes but such assessments are complex and our standard service does not apply to property which was originally constructed prior to 1910.

Given information on old buildings we will provide a fee quotation for assessment of reinstatement cost.

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Repairs and reinstatement works

Following fire, flood or other damage covered by the buildings insurance policy, insurance companies appoint loss adjusters to manage the claim on their behalf. 

In many cases clients allow the loss adjuster to assess what repairs are required and arrange for engineers’ reports, building works etc.

Many clients are unaware that they are entitled to appoint their own surveyor to negotiate a fair settlement with the loss adjuster and arrange repairs.  Surveyors’ fees are recoverable in addition to the cost of the works.

This avoids the possibility that the works will be limited and the monetary claim reduced.

An example would be where a building is partly underpinned rather than wholly underpinned when that is necessary to ensure that the matter is dealt with correctly.  Another example would be where a building is underpinned but cosmetic repairs such as levelling of floors, window arches and door frames is not carried out.

We believe that our clients are best served by instructing their own surveyor to deal with reinstatement repairs. 

Insurance assessment of flats

Should you own a lease of a flat it is common for the whole building to be insured on a block policy arranged by the freeholder.  In these circumstances assessment of a single flat is unnecessary.

We would assess an individual flat if the client is responsible for arranging insurance under the terms of the lease.

We assess reinstatement costs for blocks of flats but such buildings are not included within our standard terms.  Given basic information about a block we are able to provide a specific quotation.

James Flynn Chartered Surveyors?

We are an independent firm of chartered surveyors and have been advising clients on all aspects of property value and condition since 1980 from our offices in London, Surrey, Hampshire, Sussex and Kent.  We mainly cover the London and South East region but travel further afield when this is requested.

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To contact us please select from the appropriate area link below:

London  | Surrey | Sussex | Hampshire | Kent


 

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