Clients often provide us with building sums insured that are out of date, ‘guestimated’, found online or based on the ‘average price’ amounts in the Building Cost Information Service (BCIS) or Association of British Insurers (ABI) guides.
It’s rare that any two blocks of flats look the same from the outside or have the same finish and layout internally. So why would they be valued the same using average rates?
Buildings sum insured is the maximum amount of money that your insurer would be prepared to pay to rebuild your property if it was badly damaged or destroyed. So it’s really important to get it right. The last thing you need, should your property be severely damaged, is to discover at a critical time that you’re underinsured and that the insurer settlement is less than you need to rebuild your property.
To help make sure your building sum insured is correct, we’ve created a checklist of things that can differentiate one black of flats to another and influence the value.
Building Construction
Most people understand there’s a rebuild cost difference between a new modern property and a period built property, but there are some areas that are often overlooked.
To reach an accurate and compliant Royal Institute of Chartered Surveyors (RICS) Reinstatement Costs Assessment (RCA), each of the following elements need to be considered.
- Cladding with a rendered finish, heavily glazed or a marble cladding.
- Modern structural masonry versus steel frame on modern buildings.
- Concrete floor or timber floors.
While all of the materials have different values, you also need to factor in the ease of procurement and the time it takes to install them too.
Level of Interior Fit Out
The specification and finishes internally will also dramatically affect the reinstatement costs of a property. Floor finishes, wall finishes, fitted storage all make a difference. Fitted kitchens and bathrooms will also differ hugely from one new development to another.
The specification of kitchens will differ greatly too; kitchens with chipboard units and laminate work surfaces would have a far lower value than a fancy bespoke kitchen with granite work surfaces, bespoke hardwood units.
Integrated appliances and white goods and appliances should be included within a buildings valuation as well whereas non-integrated appliances and white goods considered as contents items would need to be excluded. These all need to be assessed and considered so that they are accurately valued.
All of the above would have to be reinstated if a total loss occurred and should be included in an RCA.
Professional Fees
A variety of professional fees might need to be incurred to make sure a building’s reinstatement would be approved by the planning authorities. Things you might have to consider are:
- Listed properties.
- Conversation areas.
Factors not present during the initial construction – such as archaeologist requirements, botanists and ecologists could also impact the RCA.
Externals
Items outside of the main building that form part of the development, such as mains utility connections, drainage, bin stores, parking, roads and pathways, all need to be accounted for in an RCA. Larger developments may include tennis courts, garages, electricity substation housing. The constructions of boundary walls do need to be included as well and the different cost accounted for.
Site Factors
Each location will have its own specific issues for accessing the working site. An RCA would need to be tailored to each specific site taking in to consideration access, welfare facilities, working areas, general storage and waste management, which could influence the costs of rebuilding.
Sites which have restricted access might need to gain the relevant permissions from surrounding landowners or authorities. These permissions can have cost implications, or cause unexpected delays to the developments reinstatement, adding to the costs.
To Sum Up
There are lots of variable factors beyond a basic structure and “average price” reinstatement, which need to be accounted for when assessing and valuing the reinstatement of your property. Being under insured could result in insurers applying average and reducing the amount they settle. A full assessment from a specialist firm is recommended to make sure you have an accurate valuation in place so that you’re not financially compromised and that you have peace of mind that you have the right funds in place to do the work that’s needed.