Have you had your properties valued for insurance purposes within the last 3-4 years?
If the answer is no, then you may well be under-insured and open to unnecessary business risk. We have been asked to assist on a couple of buildings recently where the clients had not undertaken a valuation for 7+ years and had subsequently suffered fire damage. When they went to make a claim both parties found that were insured at 70 – 80% of the true rebuild cost, and would therefore only be reimbursed at that rate meaning both clients had to cover the remaining costs to the tune of five figures each. Working with our clients and their insurers we were able to narrow the difference by about half; and then work with our clients to reinstate their properties to look as good as new.
If you are under-insured your insurance provider will only ever reimburse you for the percentage of the valuation you should have been covered at. As a result £100,000 of damage to a million pound property when insured at 75% of its true rebuild cost would only receive £75,000 in reimbursement costs.
It is important to remember that the market value of a building; and the rebuild cost can often be very different figures. As an example consider that most central London property valuations far exceed their build cost; whilst the opposite can be true of say a Victorian building in an old industrial town. A further consideration is that inflation rates in the construction industry; and within your local area can vary as compared with the national average; and as such generic inflationary rises should not be applied for more than a 3 – 4 year period. Both your valuation reports; and your insurers will discuss this within the fine print.
By way of a further example we also recently undertook a Reinstatement Cost Valuation where the building had being under-insured by approximately 30% or to the tune of several million pounds; so the consequences of being under-insured can be severe.
If you would like to discuss the above in more detail; then please contact Underwoods on 01604 783003
Posted By: Bill Crowther
Have you had your properties valued for insurance purposes within the last 3-4 years? If the answer is no, then you may well be under-insured and open to unnecessary business risk. We have been asked to assist on a couple of buildings recently where the clients had not undertaken a valuation for 7+ years…