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Is Your Property Adequately Insured?

Warning Traffic Sign On Flooded Road

This month we’ve had no sign of a ‘flaming June’ but more ‘raining June’ as many parts of the UK have suffered extensive rainfall and unseasonably low temperatures. The weather has served as a timely reminder of the importance of reviewing your insurance policy to ensure it includes the necessary assets and provides sufficient cover.

Many people simply pay their renewal year after year and do not think about the consequences of being under insured.

It is important to have your residential, commercial and agricultural property valued regularly to ensure that should the worst happen, you have sufficient cover for the value of your assets. An insurance valuation is the inspection and assessment of a building in order to calculate the re-instatement cost, i.e. how much it would cost to rebuild the building. Each building is different and it is important to assess factors such as size, construction, age, floor to ceiling height, location and access.

      Matthew Payne

If your home has been extended or extensively refurbished, is Listed, or constructed in materials other than brick, then it is likely that the buildings insurance valuation is too low; extensive outbuildings, walls and hard landscaping are often forgotten.

At Sheldon Bosley Knight we have the expertise to provide accurate buildings insurance valuations that eliminate this risk so that your buildings are fully insured.

If you require further information or advice then please contact Matthew Payne MRICS on 01386 444900.

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Property Insurance Update

Property surveyors

Property surveyorsThe Insurance Act 2015 came into effect on the 12th August this year.  It requires those seeking insurance to make “fair presentation” to the insurance company.

Unhelpfully this “fair presentation” is not defined but is likely to include personal information on convictions, bankruptcy or county court judgements against the insured, and omitting information deemed to be of relevance could significantly affect the chances of getting a claim settled in full. Naturally for property insurance, accurate details of the property and claims history must also be disclosed.

If a property is underinsured ‘averaging’ would usually apply to any claim, so that the amount paid out would be reduced in the same proportion that the property has been underinsured, which can have serious consequences. However, if the property has been valued for insurance purposes (known as a ‘reinstatement cost assessment’) within the last 3 years by an RICS qualified Chartered Surveyor, averaging will often be deemed not to apply.

£20 note houseReinstatement cost assessments are not market valuations and this is often a point of confusion when setting an appropriate insured value for a property, and there is often a significant difference between the two. For example for Listed buildings or those with unusual features, the reinstatement cost can frequently be higher than the market value. It is also important to include features such as fences, drives and patios, private services etc., in addition to the rebuilding cost of the buildings themselves. Sheldon Bosley Knight can provide assessments of value on both bases.

Once the rebuilding cost assessment has been made indexation would normally be applied by the broker or insurer upon renewal, however we would normally recommend that revaluation is undertaken at least once every 5 years, or preferably 3 years to take advantage of the potential averaging waiver. Building price inflation is currently running at around 3.5% per annum for residential property.

Insurance premiums will show some increase at renewal if only for the increase in Insurance Premium Tax (IPT), which has risen from 6% to 10%.  The premium is partly based on a risk assessment that the insurance company will make, and the location in which the property is situated will have a bearing on the perceived risk.  Another example perhaps of postcode lottery!

factory unit - commercial property insuranceVAT is generally not included in a rebuilding cost assessment for a residential property, given that a total rebuild would be VAT exempt.  A different approach is necessary for commercial property however, and also in our opinion for Listed buildings where in theory a repair may be imposed by the conservation authorities even when a property is nearly completely destroyed, since VAT is applicable to repairs.

If you need advice regarding insuring your property please contact Matthew Payne MRICS or Simon Wilkinson DipSurv MRICS MNAEA MARLA at the Stratford upon Avon office.