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The risk of under insurance
Bluntly put, if you underinsure your premises the claims payment you receive may not be sufficient for you to reinstate your premises. The age, nature of occupation, construction, and location of your premises will all influence its reinstatement cost.
Here is an overview of the key aspects you should consider making a correct building insurance valuation.
Materials of construction
If original building materials are no longer readily available there can be a considerable increase in cost to source them.
Decorative features
Some decorative features can only be achieved by specialist craftspeople. You should keep detailed records of how elaborate embellishments were achieved and who created them, so they will be easier to recreate if the need arises.
Labour skills
You need to bear in mind, specifically with decorate features required specialist craftspeople, that labour might not be freely available, and costs might have increased substantially.
Location and access
Access to your site may be limited, either by road or by restrictions placed by local authorities, regarding the timings for deliveries. Your buildings might have relationships with other buildings or the nearby landscape and consequently there might be additional costs required to ensure that relationship is protected and supported during any rebuilding work.
Site and layout
The size, shape and layout of a building will all affect the build costs. With larger buildings you should benefit from economies of scale. Deep basements and sub-basements can add significant costs bearing in mind the retaining nature of the walls and the engineering skills required to retain a large quantity of soil.
Demolition and clean-up costs
In the event of a serious fire or other structural damage, where asbestos or other contaminants are present in a building, the whole of the resulting debris is likely to be declared contaminated, and as such will need to be disposed of under licenses. This can add a significant amount to costs.
Professional fees
Your building insurance valuation should include suitable allowance for architects,’ surveyors,’ engineers’ and other specialist contractors’ fees. These can all add to the cost.
Value added tax (VAT)
If you are likely to have to pay VAT on the rebuilding of your property, it should also be included in your buildings sum insured. You should seek advice from your accountant or other professional adviser.
Building regulations
It is likely that building regulations will have changed since your original buildings were constructed, so you will need to allow for additional work to comply with modern regulations and their specific requirements, for example, access for disabled people or protection from fire risk.
Additional buildings and facilities
Your building insurance valuation should cover all ancillary buildings, outbuildings, tennis courts, swimming pools, walls, and driveways.
What else might you be interested in?
Preparing a business continuity plan
Disaster strikes when you least expect it. Hopefully, a disaster will never happen but if it does you need to be prepared.
Cold weather advice
Careful maintenance and risk management can help prevent property damage and/or injury during the winter months. We’ve brought all of our cold weather advice together in one place.
