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Reinstatement Cost

We find on many occasions that landlords as well as right to manage landlords/lessees/Right to Manage companies. Often have a sum insured that is either more than required or an under insurance. Both can cause a large amount of problems such as paying too much for your insurance and/or being under insured so that you have less of a pay-out.

iInsure365 have teamed up with RebuildCostAssessment.com. So that clients can organize a very cheap way of checking that their properties correctly insured. The Company will carry out a desktop valuation for you. Taking into account all of the necessary requirements of the Royal Institute of Chartered Surveyors commonly known as RICS.

How long will an assessment take?

The assessment will take between three to six working days from the acknowledgement of the order. This is for a guide only and some assessments may be completed sooner. If an assessment will believed to take longer they will contact you.

How can I be sure that the information they use to complete the rebuild cost is up to date?

The RebuildCostAssessment.com reports are quality assured. Prior to release by a member of their experienced team. They have access to up to date rebuild cost data. Available to guide them as to the rebuild cost information service compiled and maintained by the Royal Institute of Charted surveyors (RICs).

What happens if I input the wrong address details?

It is important and your responsibility to take time to enter the full address in which you wish to be assessed including the post code.

Does an assessment take into account all the units/outbuildings or are these considered to be separate properties?

Yes, the assessment will include all units and outbuildings within the boundaries of the property. They will be recorded. If they have not been acknowledged on the unit/outbuilding you need to contact them.

The property is currently having building works completed can they complete the assessment to indicate the rebuild cost for completed works?

Part of the assessment is the review of the planning applications and these will be taken into consideration. Yet, they may not be aware of all building works that are subject to planning. It is your responsibility to ensure that any recent development of this nature is given to the company immediately.

Does the online survey take into account the materials the building is made from?

The notes within the report set out what is and isn’t included and you can check these in advance on their website. We will give you details of what’s in the report later.

How long is the rebuild cost assessment valid for and does it take into account for instance inflation?

The report is valid from the time of the assessment. It makes provisions for inflation or the retail price index (RPI) will be part of the client’s insurance arrangement. But, the inflation provisions can take many forms and you need to check with us. It is your responsibility to ensure that there are adequate levels of cover for the clients building on an ongoing basis. Should you make any significant changes to the property that could affect the rebuild cost such as an extension, mezzanine floor, or new building? You should contact us in this regard.

How would the rebuild cost assessment affect our insurance premium?

This all depends on the filing of the report and later action that you need to take. It may be as we have stated that you may be over or under insured.

Is the information on the property shared with anyone else?

These findings will not be shared with any other parties unless you give them the written permission to do so.

What will be in the report?

The report will lay out the following:-

  • Client’s name
  • Policy number
  • Property address and post code
  • Date of assessment
  • Who it was assessed by and who it was checked by
  • Current sum insured such as main buildings, outbuildings, listed and conservation area if required.
  • Details of the square meterage of each individual floor.
  • It will take into account professional fees and demolition if required.
  • It will take into account outbuildings.
  • It will take into account all the items and give you a rebuild.
  • It will give you a detail of how it was calculated.
  • It will show you details of your property and how it was calculated.
  • It will tell you how long a rebuild will approximately take.
  • We have therefore informed you of a guideline of how long it will take to rebuild the property.
  • It will tell you how often the rebuild assessment should take place.

It will list out the property details by way of description such as:-

  • Main building material
  • Roof type of material
  • Window type of material
  • Number of floors (excluding basement)
  • Year it was built if listed
  • Whether it is residential, commercial usage
  • If there is any extension or conservatory
  • If there are any outbuildings structural or usage
  • Any other permanent structure
  • Any car parking or loading bay
  • It will have information sources such as Google earth as street view
  • Find maps
  • Zoopla
  • Rightmove
  • Bing maps
  • Historic England
  • Companies House
  • Local authority planning
  • Valuation office
  • Other industry standard quality surveyor data
  • BCIS which is the Royal Institute of Chartered Surveyors data

It will have notes of the assessment. This will tell you what has been taken into account and how it has been dealt with. For instance it would include the following:-

  • An estimate for rebuilding cost in the event of a total loss
  • The external square meterage of the property
  • When dealing with the cost included in the assessment it takes into account the following:-
  • Cost of the removal of debris and architects, consulting engineers, surveyors fees.
  • Any sum cover of cost in complying with building regulations or local authority
  • It has made an allowance for unique materials
  • It will make an allowance to take into account the listing of a property
  • It will make an allowance for all foundations apart from abnormal foundations
  • It will make an allowance to external works for the boundary of the property including boundary walls and fences, stone paving including sub base.

It will not take into account the following costs as they are excluded:-

  • Basement and sub-basement pilled foundations and ground improvement costs
  • No allowance is made for road closures or diversion of major services
  • No allowance is made for any required excavation replacement or stabilisation of the land
  • No allowance is made for demolishing pre stressed or post tension concrete
  • No allowance is made for any value in salvage material
  • No allowance is made for removal of any hazardous materials or improvements needed to unstable or contaminated land.
  • No allowance is made for any fees referred to above
  • No allowance is made for any costs of inflation over the time lapse of the date of the event that results in a need to complete rebuild and completion of that rebuild
  • No allowance is made for the tenants fitting out works fixtures and fittings or furnishings. But, in assessing the extent of the building structural services and fittings. They have made a reasonable assumption with respect to the inclusion of items which may have been installed by tenants which by their nature, degree or permanence of the structure
  • No provision with respect of the process of plant machinery, fitting out works
  • No allowance for temporary supporting or protecting any damaged structure
  • No allowance is made for any upgrading or improvements of the property

The rebuild period does take into account that there are many factors when trying to rebuild a property. It is only a guideline in this regard. The period assumes that planning and building regulation will expeditiously to completion. It is only meant as a guide not a time frame.

In relation to listed buildings it is important that you speak to the company direct in this regard.

The assessment relates to the buildings only and not the contents. Consequently no allowances have been made for the contents of the building.

It is important that you speak to the company direct as to exactly what is required by you and for what purposes.

It is important for clients to know that keeping their insurance up to date with the correct sum insured can reduce their policies potentially in the hundreds of pounds. The cost is not high and we would suggest that you seriously consider carrying this out.

Reinstatement Cost – Have you got the right amount of cover?

As a landlord, you are responsible to ensure that you have the correct amount of insurance for your property. Landlord insurance is calculated on the reinstatement valuation of your property. That is what it would cost to rebuild the property back to its original state. Many landlords often use their surveyors’ report for this figure. If the property has recently been bought or remortgaged this won’t be an issue. You are responsible as a landlord to ensure that your rebuild cost is correct.
 

Did you know that if you make a claim and the reinstatement cost is incorrect it could cause you a problem?

When you insure your assets, like a building, you must advise the insurer of the value to insure the property for. If you get this insurance value wrong and it is lower than the real reinstatement cost assessment value then you are at risk. Meaning that in an event of a claim insurers will only pay a percentage of the claim amount. This method of paying out a percentage of a claim is known as a condition of average.
 
For example, the insurance policy covering the listed buildings is based on a sum insured of £80,000.00. When a claim occurred the real insurance value was £100,000.00. The proportion of average would then be £80,000.00 or 80%. You would only receive 80% of any loss that you suffer.
 
There are various ways that property owners can calculate the insurance but the easiest way is via https://abi.bcis.co.uk/. The website will work out for you the exact residential rebuilding cost. It only takes two to three minutes to register and go through various questions to help you. You could alternatively instruct a local surveyor. Their costs are upwards of £250.00 but it is so important that you get it right.
 
You will often find that the rebuild figure is lower than what the properties market value is. This is because in real terms it is what it costs to rebuild not what it is valued at today. There are rare exceptions of when the property value is lower than the completely rebuild cost but these are market specific.
  

Affordable and professional insurance valuations

We have teamed up with rebuildcostassessment.com. To provide you with affordable reinstatement costs. Buildings insurance should cover the amount required to rebuild. Yet, fewer than one in ten commercial or residential properties in the UK are covered correctly.

If you are over-insured, you are paying too much for your building insurance. If you are under-insured, you face a reduced pay-out in the event of a claim. Insurance claims can be reduced by hundreds.

We are able to provide you with a comprehensive rebuild cost assessment (RCA) report guiding you on how much you should insure your building for. This is a fantastic and affordable online service. Which can protect your organization from the severe consequences of under insurance. Backed by the Royal Institute of Chartered Surveyors organization it lasts two years.

What is declared value and building sum insured?

The declared value is the value of the bricks and mortar. It covers everything fixed to the property including fitted kitchens and bathrooms from the day the policy starts. It is the most important figure. The sum insured figure is always higher than the declared value. This is to cover the cost or rise in building materials or inflation over the period of the insurance.

If your policy shows a building declared value and a building sum insured, then the policy itself includes an allowance for inflation. This means from the day your policy starts to the day of a potential claim it takes into account any sudden rise in inflation. Building materials and labour costs affect the declared value. So, the percentage increase in the building sum insured ensures that the building is never underinsured. Don’t be afraid of insurance terms we are here to help.

You need to understand that a lot of British insurers aren’t able to help with the rebuilding cost. There is a rebuilding cost calculator. But these can often be very complicated and a site visit may be needed. In respect of listed buildings, it is more than likely that you would need a chartered surveyor to attend the premises. There are a lot of articles on building cost information. But there is also BCIS rebuild cost calculator which will also be able to help you calculate your sum insured. They will list out whether it is standard construction. House types and what type of construction method was used in the property to completely rebuild it. These are all regulated by the Royal Institute of Chartered Surveyors. It is important that you get the right cover and that is why we have teamed up with the above company.

Summary

I believe that it is absolutely critical for landlords to check their landlord insurance rebuild cost. We have had one very bad experience for a landlord where he cancelled the index linking over many years. This lead to the property being underinsured. Whilst he was saving £30.00 or £40.00 each year by removing it, it came to a devastating end when the property burnt down. Due to the removal of index linking, the payout was £30,000 less than the full claim amount. I would strongly advise all landlords to check their rebuild figures using the link that we have provided above.
 
Mark Harringtons
Managing Director
www.iinsure365.co.uk

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