HowISyoUR INSURANCE pREmIUmCAlCUlAtEd?


Youprobablywonderwhen youringaroundtoreviewyour insurance renewal terms why premiums vary so greatly for the same block. Well here’s howit is done…


Firstly your property informationwillbe requested including:


ntheblocksconstructioni.e tile or flatroof, timber or concrete floors


ntheage of thebuilding andifapurpose builtblock of flats or convertedfrom alarge house, hotel, mill etc into flats.


noccupation (i.e.whether owner occupied or tenanted)


nwhetherthere areany communal facilities such as tennis courts, gymnasiumsor swimming pools


nclaimshistory or “losses” experienced during the previous three years


nrebuilding cost (which will be stated on your currentinsurance schedule as declared valueorsuminsured–see opposite forthe explanation of these terms)


Ofteninformation aboutthe surrounding area will be requested,for examplewhether youare awareoffloodinginthe locality or if your adjacentpropertieshavesuffered from subsidence.


Once theunderwriter has collated this informationhe/shewillnormallycheck the “experience” of the area.


Subject to the block conforming with the Insurer’s underwriting criteria most specialist intermediaries will have theauthority to applya“rate” to your reinstatementcost (DeclaredValue or Sum Insured–see opposite)apply to your sum insured, for example:


£1,000,000 (DeclaredValue/SumInsured) x 0.080 (example insurancerate) =£800.00 + 6% IPT (Insurance PremiumTax) = £848.00.


Thepremiumquotedfor this blockwould be £848.00. The variations in premiumoccur becauseeachInsurersratewillbeslightly different,normallydependent on their profitability with thepropertytypeovera period of time.


EXCESS


Thefirstpart ofaclaimwhichis paidbythePolicyholder.TheInsurer paysamountsin“excess”ofthis firstamount.Anexcessmaybe compulsory(i.e.imposedbythe Insurer)orvoluntary(i.e.accepted bythePolicyholderinreturnfora premiumreduction).


8 Flat Living GUIDETO INSURANCE


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