Flat-Living.co.uk Insurance
‘Make sure everything is covered!’
No – this is not about avoiding peeping toms, it is making sure you may have made to the property since the level of cover was first
that your home, your most valuable asset, is properly protected set.
and fully insured.
Many people wrongly assume that, if the cost of repairing their property
Should anything happen, such as a fire or structural damage, are you under a claim is less than the sum insured, it will automatically be paid.
certain that your buildings insurance would fully cover any loss? This is not true: payouts are based on the level of cover being sufficient
to reinstate the whole property.
In these hard economic times, it may be tempting to cut corners and
either leave the amount insured at last year’s level or even reduce it to For example, take someone who owns a flat which is currently worth
save a few pounds in premium payments. This is a false economy, and £150,000, but which has a building reinstatement value of £100,000.
would have a serious impact on any payout in the event of a claim. They purchased the property a few years ago for £250,000 but have
never increased their insurance cover from that time, which was only
Just because interest £80,000.
rates are at an all-time
low, and property Sadly they suffer a fire, which causes damage costing £40,000 to repair.
prices have fallen Had the property been insured for the full £100,000, this would have
dramatically, this does been paid out in full, but because the cover is only 80% of that figure,
not mean that the only £32,000 was recovered from the insurance company, leaving the
cost of replacing your owner to find the rest.
home in the event of
a catastrophe has Don’t let this happen to you. Relatively small increases in your premium
gone down. On the to ensure you are fully covered give a huge benefit in peace of mind.
contrary, material and
labour costs continue to rise.
Most buildings insurance policies include provision for an annual
indexation increase and, whilst this provides some protection against
the impact of cost inflation, it does not provide an accurate guide
to the true cost of rebuilding your home. It is therefore strongly
recommended that an up-to-date reinstatement cost revaluation is
carried out by a Chartered Valuation Surveyor every 5 years. Such a
revaluation will also take into account any changes and improvements
What if disaster strikes…
Getting the sum insured right is essential for Residents’ Insurance reinstatement
Management Companies (RMC) values rarely bear any
resemblance to market
What will the winter of 2009/10 bring? We can all remember floods, values. With such wide
storms, tornados and some notable fires which brought insurance ranging cover available,
to the forefront of our minds. The adequacy of Insurance cover can, it is essential that all
however, depend on the accuracy of the valuation placed on the elements that make up
buildings. ‘buildings’, as defined in
the policy, are allowed
In general, it is not the claim caused by a leaking basin in the flat for and included in the
above nor graffiti sprayed on the block of garages which will cause valuation. These include
the RMC an insurance problem, as for such relatively minor claims dwellings, garages, day rooms, common parts and lifts. The insurance
under insurance will often go undetected. However, the adequacy of policy may also allow for external items such as car parks, lamp
the sum insured will be scrutinized following a major incident, such standards, hedges, walls and fences. Allowance also needs to be
as a fire starting in the centre of a block which spreads upwards and included for increases in cost related to compliance with current
downwards, with other areas of the building lying water logged as a building legislation. In addition, policies should be index linked to
consequence of extinguishment. If the cost of repairs were to exceed protect against inflation. All of this responsibility sits with the RMC. So
the building sum insured, what then? how can the RMC fulfil its obligations?
If the sum insured is wholly inadequate or exhausted by the loss, the BCH offer discounted rates for Rebuilding Cost valuations to Flat
residents may then turn their attention to the RMC. It is after all, the Living customers on a national basis. In most cases, fees are based
RMC that represents the residents and which is ultimately responsible upon the existing sum insured not the revised sum and agreed and
for the insurance policy. It is therefore good practice to obtain fixed in advance. For a relatively modest
professional advice on sums insured for insurance purposes at least fee, peace of mind can be obtained so that,
every 5 years. in the unlikely event that disaster strikes,
the RMC can focus efforts on rebuilding,
Roger Corp, Director of Barrett Corp & Harrington Ltd (BCH), an not trying to raise funds to finance the
approved supplier of insurance valuations, has both a quantity underinsurance short fall.
surveying and loss adjusting background and much experience in
dealing with major incidents, particularly floods and fires. Roger says Roger Corp BSc (Hons) ACII FCILA FUEDI
‘The unexpected disaster need not be exacerbated by underinsurance. ELAE, Director - Barrett Corp & Harrington
All too often the ongoing impact of underinsurance will last far longer
than the initial shock of seeing the asset razed to the ground. Setting
the correct sum insured will avoid this misery.”
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