Accurate Buildings Insurance – Avoid the pitfalls

Day and Bell recently appointed specialist Building Surveyors to undertake insurance valuations on a large part of our management portfolio. Despite index-linking of the previous figures, we found some disparity in the level of cover that is required, with some significant adjustments needed in declared values. Insurers should now pay to the full reinstatement cost of the potential damage, or risk and the stakeholders are prepared for the commensurate risks.

Thankfully the premium increases for our client’s leaseholders and tenants were not all proportionate with the increased cover. This was very welcome in context of the current challenges to the cost of living.

We have seen some policies where the inflation factor on the sum insured is just 10% from the declared value. If there were a major loss, there may be a two-three year period for reinstatement, where inflation in construction costs could vastly exceed this uplift. Our standard block insurance cover allows 30% inflation factor, which should be adequate for major claims, especially when we have comfort in the correct level of cover.

Property owners should always seek advice from competent Insurance Brokers. Day and Bell Surveyors Limited is an Appointed Representative of PIB Risk Services Limited which is authorised and regulated by the Financial Conduct Authority. Here’s their guide on The impact of building cost inflation on insurance.