How do I work out my Building sum insured?’ James Lavers takes on this week’s insurance conundrum.
When buying a property, and needing to find out the building sum insured, a good place to start is to look on your full structural survey, or on your mortgage valuation. They will normally indicate a rebuild figure, which you can use for building insurance purposes.
If you do not have either of these then it is certainly worth consulting a professional, such as a Chartered Surveyor, who will be able to advise on an appropriate figure.
In some cases, high net worth insurers such as Hiscox, Chubb or AIG, may additionally wish to survey the property after inception of a policy, just to ensure that the rebuild costs are correct. This effectively provides a guarantee to both the insurer and the homeowner that the value is correct.
“I’ve bought a Victorian terrace house in West London. The cost of the home was £1.2million but the reinstatement amount on the structural survey is only £310,000 – can this be correct?”
We get asked this a lot, and the answer is yes, probably. Rebuild cost does not usually bear any relation to the price paid for the property, especially in the London and South East where property prices continue to soar, it relates directly to the cost of reinstating, or rebuilding the property from scratch should the worst happen.
Should Outbuildings, Sheds, Garages be included in the rebuild amount?
Good question, and the short answer is yes, everything should be included in the rebuild cost including; garages, greenhouses, gates, boundary walls, driveways, swimming pools, tennis courts, outbuildings and barns. Sometime insurers will ask for a separate breakdown between the main house and the outbuildings.
What about fixtures and fittings, or is that contents Insurance?
Fixtures and fittings also count and make up part of the building sum insured, although it is often mistakenly believed they are part of contents insurance. Therefore newly fitted expensive kitchens and bathrooms should also be included in the total figure.