Insurance practice says that one of the main factors in the premium is the value of the asset being insured. Take buildings insurance for instance, the value of the asset is called the sum insured; this is the maximum the policy will pay if the building is destroyed by fire or flood etc.
Building owners calculate this rebuilding figure. Two recent cases have caused us to revisit our advice on buildings sums insured. £1 million to rebuild a five-bedroom house should be more than enough; right? Well, no actually. Building material costs have doubled over the last 12 months and other costs have risen sharply to. Where the sum insured must cover debris removal and professional fees as well, this limit is likely to be exceeded. This means the policy pays the £1 million limit, leaving the rest to be paid by the building owner. The short fall can be thousands…
Some insurers offer unlimited buildings cover. Typically, the extra premium is £250, on top of a base premium of around £700 for a buildings sum insured of £1 million. We asked a surveyor we work with to look at the costs on one of our cases and he promptly phoned his broker and moved to unlimited cover.
Property market values have long out distanced rebuilding costs, it seems current conditions mean rebuilding costs are catching up. We have seen under insurance being raised where, say 5 years ago it may not have been. So, for an extra few hundred pounds, you can remove the anxiety of under insurance and having to contribute to costs at a time when you can least afford to do that.
If you want to discuss rebuilding costs, please get in touch. The surveyor, Mike Sandhu at SC Architecture will be happy to provide advice as well.