Many people confuse buildings insurance with their property’s reinstatement value – which means they could be left badly out of pocket if their home or business is destroyed by fire or flooding.
Here Maunder Taylor, house valuation surveyors in Potters Bar, explain the differences between the two, and how we offer insurance and valuation as part of our comprehensive range of property-related services.
Taking out buildings insurance means you are covered in the event of damaged caused by fire, flooding and storms, as well as acts of vandalism. Your policy, which may also pay out in the event of other issues, such as frozen pipes, falling trees and subsidence, will cover the cost of any repairs. It is not legally compulsory in the UK but it is extremely advisable to take it out as otherwise you will be faced with a hefty repair bill.
The situation is different if you don’t own your home or property. Leaseholders may have to take out a policy with a named insurer, while for tenants it’s usually the responsibility of the landlord – who need to be properly protected as the property may be a crucial source of income. If there is any damage to fixtures and fittings in your rental property, it may be covered by contents insurance.
This is known as the property’s Declared Value and should not be confused with the property’s market value. Reinstatement value is the cost of replacing the property if one of the problems mentioned above completely destroys it and it has to be rebuilt from scratch.
This will have to factor in a lot of additional costs such as debris removal, site clearance and architects’ fees, as well as the actual cost of any rebuild. The tradesmen who carry out the rebuilding work may have to use sophisticated, expensive equipment and need to factor in insurance and health and safety regulations – all of which will be reflected in their final bills.
Why it Matters
If you under-estimate the reinstatement value (and it could be tempting to do this to keep the cost of your premium down) you could find the insurer will only pay a percentage of your final bill. For instance, if you put your reinstatement value at £200,000, as this is what you think the property would fetch on the open market, you won’t be taking into account architects’ fees and other associated costs. You could be as much as £200,000 short which you will have to repay yourself.
Maunder Taylor – House Valuation Surveyors in Potters Bar
You need a qualified expert such as Maunder Taylor to come up with an accurate reinstatement value. We are experienced house valuation surveyors in Potters Bar, as well as Totteridge and Whetstone (where we have offices) and will be able to take into account any variables, such as the techniques used in any rebuild and labour costs which vary from area to area.
We would recommend that, whatever property you own, you have the reinstatement value reviewed regularly because the associated costs are likely to increase over time. Our experienced in-house team will ensure you have the correct amount of cover for your home or business and can act as your intermediary to obtain competitively priced quotes from insurance companies.
We also offer many other domestic and commercial property insurance services across North London and Hertfordshire, including advising on employers’ liability cover, common parts contents, directors’ and officers’ liability cover and other property-specific policies. If you would like to know more, follow this link. You can also call us on 020 8446 0011 or click on this link and fill in the online form.