ThEImpoRTANCEofCoRRECT pRopERTy vAlUATIoN


AREyoU AdEqUATEly INSUREd?


nA block of 15 flats is insured for £2,000,000


nThe development should have been insured for £3,000,000


nMajor damage occurs to the value of £600,000


nDuetounderinsurance, insurers invoke theConditionofAverage andpay only two thirds of thelossinproportiontothe degree of underinsurance i.e. £400,000;resulting in ashortfall of £200,000.Leaseholders have to find £13,333 each in order for the repairs to commence.


Don’tforgetthatifthere is atotal loss,the policy will only payuptothe suminsured, resulting in an even larger shortfall.


Roger Corp is aDirectorwithinsurance reinstatementcostspecialists, BarrettCorp& Harrington Ltd


Tel 0844 412 4495 Email roger@bch.uk.com


Acommonreasonthatmodernblocks canfindthemselvesunderinsured is themisunderstandingbetween rebuildcostandbuildcost.


Typicallythisoccurswhenablock of flatsisbuiltandthedeveloper providesthecost ofbuildingthe blockasthesuminsuredfor insurancepurposes.Asaresult the suminsuredmakesnoprovision forcostsincurredwithdemolition ofanyremainingstructures, site clearance,professional feesandthe unrecoverableVATassociatedwith these.Forexampleadevelopermay spend£1,000,000buildingablock of flatsbut inactualfactthecost of rebuilding(onwhichyourinsurance policyshouldbebased)maybein theregionof£1,350,000beforeany allowancefor inflation.


*VAT–ForguidanceonVATinrelation to thebuildcost ofblocksofflats, pleasevisitwww.flat-living.co.uk/ insurance/VAT


Flat Living GUIDETO INSURANCE 17


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