Flat-Living.co.uk Insurance Block insurance: how much is yours worth?
One of the most important aspects of block insurance is to ensure that your buildings cover is adequate and that means getting the valuation right, says Roger Corp.
should ask the following questions: • Does the firm have a track record and specialise in this area? • Does it have a sound knowledge of insurance policies and practice?
• Does it have adequate professional indemnity cover? • Does it have preferred supplier status with insurance brokers and insurance companies?
• Is the firm regulated by the RICS? • Is the quoted fee fixed and competitive and how has it been calculated?
There are many surveyors who can provide this service but in practice, there are relatively few who carry out insurance valuations on a regular basis or who specialise in blocks of flats. There are even fewer who have a sound knowledge of insurance policies and experience of handling insurance claims, so make sure you consult the right firm.
purposes on a regular basis. Rics recommends that valuations are updated at least every five years. failure to take appropriate steps to correctly insure and update valuations will leave property managers and RMcs open to negligence claims if there is a significant loss and insufficient funds from the insurer to reinstate (see flat living’s advice below). the same could apply if leaseholders discover exces- sive premiums have been paid due to over insurance. So where should you go for a buildings insurance valuation? When looking for a firm to value your block for insurance purposes, you
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he reasons for inappropriate insurance cover are many and varied and have been addressed in previous issues. Whatever the reason, all Residents’ Management compa- nies, property owners and managing agents should have those properties within their control valued for insurance
Roger Corp BSc Hons ACII FCILA FUEDI-ELAE Director Barrett Corp & Harrington Ltd
Block insurance tip: Don’t forget the value of improvements to individual flats, such as bespoke kitchen units or luxury bathroom fittings. These fixtures and fittings are generally considered part of the building fabric rather than contents for insurance purposes (check your lease) and all add to the reinstatement cost should your building suffer irrevocable damage. Your valuer or Residents’ Management Company will not know improvements exist unless you tell them, so make residents aware that they should inform the RMC if they are carrying out renovations that will add value to the property.
Flat Living’s advice: don’t fall into the ‘average clause’ trap
Insurance is a complex subject and it is important that RMC directors understand the way their cover works, should they need to make a claim against their policy.
magine your block suffers a fire which causes £100,000 worth of damage and you have building reinstatement cover of £300,000. You might think – no problem, i have three times that amount of cover. But you would be forgetting what is known as the ‘aver- age clause’.
The effect of this clause is that the insurance company says: “the
true reinstatement value is in fact £400,000 but you are only covered for £300,000 so we will only pay three quarters of any valid claim, regardless of the fact that your claim is less than the amount you are covered for”. The insurance company therefore pays out £75,000 leaving you £25,000 short. So it is vital for your own peace of mind, and that of your fellow residents that the rebuild cost of your block is accurate. Don’t forget the value of home improvements such as new kitchen
units or bathroom fittings. These all add to the reinstatement cost should your building suffer irrevocable damage. Directors should also be aware that insurance companies won’t pay
‘over the top’ amounts if you over insure or insure the same risk with more than one company. They cap the amount payable to the true reinstatement cost and insurers will share the risk/cost where insurance is duplicated.
www.flat-living.co.uk
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