Buildings Insurance – Risk or Cost?

Buildings insurance for commercial properties is an important commodity to get right, not only does it protect the building, it can also protect any loss of rent and other consequential losses (depending upon policy terms).

Over the past five or so years of recession, it has more than likely been tempting to leave the policy, without making any amendments to the estimated rebuild costs to avoid any increases in premiums. Possibly applying a notional inflationary increase to the cost.

Being underinsured is obviously the most concerning issue associated with an insurance policy. The risk being that should a catastrophic event the rebuild of the property would be unable to take place, as the insurance company would refuse to pay out in full.

Now, since the economy has emerged from the depths of nil growth, and the construction sector has improved and costs are rising, it is likely to be beneficial to re-visit those figures in the insurance policy to avoid being under insured.

Since a lot of insurance re-build costs tend to be set at the purchase price, or a near factor, there is likely to be scope for a discrepancy between sum insured and what costs would be incurred should the property require to be re-built after a catastrophic event. This is more probable if the property is somewhat unusual, or the market for this type/range of properties are suppressed due to a lack of demand.

On the opposite side of the issue, being over-insured results in high premiums and cost, and there is an opportunity to make a saving on-costs incurred in this respect which clearly would benefit all, as occupiers or owners.

If a number of properties held within a group of companies are separately insured, savings can be made if these are brought together in a group policy – valuations will be required to take advantage of this.

A Building Cost Reinstatement Assessment (or Fire Insurance Valuation, for short), undertakes and assessment of the building, and produces, using tender price analysis from the Building Cost Information Service (BCIS) an estimated rebuilding cost of the property in as near as to what is its current form as possible.

Should you require any further information in respect of Buildings Insurance and Fire Insurance Valuations please contact Shaun Collins, Building Surveyor at Underwoods LLP, 01604 404060, or visit our website www.underwoods.co.uk


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Buildings Insurance – Risk or Cost?

Buildings insurance for commercial properties is an important commodity to get right, not only does it protect the building, it can also protect any loss of rent and other consequential losses (depending upon policy terms). Over the past five or so years of recession, it has more than likely been tempting to leave the policy, […]