INSURANCE Advice


WHAT’SYOUR NEWbATHROOm ReAllYWoRth?


BelIndathorpe


warns that flat owners should be


It Is notuncommon for individual flat owners to undertake extensive refurbishments to theirownflats.These improvements canbeveryexpensive and significantly increase the rebuilding cost of each individual flatand consequently of the wholeblock. Dependingonthe number of such refurbishments in ablock andthe nature andtimingofarebuilding valuation, such renovationsleave thebuilding in danger of being inadequately insured. Should atotal loss occur, thesuminsured


provided by therebuilding valuationcould lead to someindividual flatownerssuffering afinancialshortfall if theoverall buildings suminsured does notmakeallowance for therefurbishmentsthathavebeencarried outbyflat owners.Asafurther consequence theResidents’ManagementCompany could becomeliabletolegal proceedings fromthese lesseesfor notmaintaininganadequatelevel of insurancefor theirblock. Consider thescenariowhere severalof


the individual flatowners in a block of forty unitshaverefurbished theirownflats.The penthouseownerscompletelyrenovatetheir en-suite bathroom.This“refurb”useshigh grademarblefittings andother luxurious touches. The penthouseowners are naturally delightedwiththe result even though thefinal invoice fromthe contractors comes in at over £60,000! Other flatownerswho carried out refurbishments each spendonaverage between £20,000 and £25,000. The collective cost of the refurbishments is over £200,000. Theabove scenario posesanimmediate risk


of underinsurance to theRMC,particularlyas the block is not due to be re-valued for another 12months.


aware of the insurance implications of home improvements Sowhat can be done? Howcan you prevent


the financial penalty that underinsurance would impose on lessees and their Residents’ Management Company? First –ensurethatthe latest valuationon


your buildingsisnomorethanthree years oldand thatwhen youdecidetore-value, your instructionstothe valuer areclear and concise. Youwillneed to bear in mind that thevaluation providesaminimumfigure that appliesatthatpoint in timeandisa recommendation only. Second – instructions givento a valuer


should include theknownandanticipated changes or probable changes to individual flats. Your building insurance suminsured should be correctedinlinewiththe recommendationsof the valuationand adjusted at each subsequent renewalinlinewiththe valuationcycle and Royal InstitutionofChartered Surveyorsindex linking recommendations. In adepressedpropertymarketpeopleare


morelikelytoimprove theirhomes rather thanmove elsewhere. Regulardialoguewith theindividual flatownersabout theperilsand


theRMCcould be liable to legal proceedings... for notmaintainingan adequate level of insurance


churesidentslineprovidemarket-leading insuranceproducts forblocksofflatsand apartments throughout theUK.


FormoreinformationcallVikkiBlair or stephenGibbson02031028526.


pitfalls that can commonly befall flat owners will help, along with putting a process in place to recognise anymajor refurbishmentswhich couldhaveabearing on your rebuilding cost. Timespent nowon valuations and dialogue


with your residentsmay save heartache in thefuture, buttobeconfident yourRMCis doingright forits lesseeswhy notconsider CHUResidentsline’smarket-leadingResidential Buildingsinsurancewhichuniquelyoffers an additional £50,000 suminsured per flat for Lessees Fixtures andImprovements – call us for a quote on 0800 281235.●


Belindathorpeismanaging director ofCHUResidentsline emailBelinda@ churesidentsline.co.uk Webwww.chu residentsline.co.uk tel 02031028526


In adepressed property market, peopleare more likelytoimprove wheretheylive thanmove


Flat Living Summer 2012 27


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