Could your property be underinsured?
During an incredibly tough time in the property market people are quite literally working overtime to save for the house of their dreams, and property professionals such as estate agents and landlords will know that more than most. But could all that hard work and effort be seriously impacted for simply having inaccurate information on the relevant insurance documents? Allow us to explain…
In case it wasn’t clear, we’re talking about buildings insurance. It’s crucial cover that you need to protect your property, should the worst happen – such as a flood or fire. These costs can reach into hundreds of thousands of pounds, and if your insurer denies your claim, you are unlikely to be able to restore your property as you’d intend to.
Imagine you had to rebuild the entire structure from the ground up. What’s the total value? If you’ve not got adequate cover for the full cost of repairs and replacements, you could have your claim denied or policy voided, and have to pay the extra costs. It’s vital that your rebuild and replacement values are up to date; as we recover from the cost-of-living crisis and high inflation rates, everything, including building materials and labour costs are more expensive.
And the long and short of it is that it’s an individual’s decision to put down a figure as to what they believe their property’s rebuild value is worth, should it be damaged or destroyed by an insured peril e.g. a fire. But how would anybody know what to put, unless they’re in the trade of property surveying? Surely it wouldn’t be anywhere near the market value, right?
Not necessarily…
Strangely, on some occasions a building’s rebuild cost could actually be higher than its market value. This may come as a shock to some people, but when you take into consideration the increased cost of materials, labour, architect and planning fees, this could well be the case.
Unfortunately, as this isn’t common knowledge, it can lead to underinsurance in respect of a property, and this can be by a significant amount. Underinsurance is simply when a property is insured for less than what it would cost to rebuild the property. In the event of someone needing to claim on their policy, this could lead to the claim not being met in full, or even declined in the event of significant underinsurance.
According to a recent report in 2022, it was found out that 90% of the 22.6million homes in the UK had incorrect levels of cover. So this is an issue that can affect all homeowners, landlords and property professionals.
How to get the right insurance advice
Sorting your insurance is not just a tick-box exercise. In fact, you could even be losing money by paying for an insurance premium that won’t cover you. A broker can advise you on the best ways to tackle your buildings insurance, and discuss your concerns in person, to give you clarity and peace of mind.
Thankfully, at Howden we can provide an advised service, and so can review this for our clients. Expert advisors, like the Howden team, are here to help you establish rebuild costs so that you get a true picture of the price of replacing everything, should the worst happen.
And now, we have also teamed up with Barrington Corp Harrington (BCH), professional buildings insurance valuers, who can appraise your buildings sum insured for £105 excluding VAT and make a recommendation.
Our recommendation is that people review the value of their sums insured if they haven’t done in the last 12 months. We also please ask that people please contact their local Howden branch or another insurance broker if they would like guidance on what they should insure for.
If you are a landlord, estate agent or another property professional and would like a specific Howden contact then please speak to Leo Hanna, Commercial Account Manager from our Salisbury branch, on 01722 346 897.
