Previously we posted a blog about the importance of having an accurate property valuation to make sure your property is adequately insured, where Martyn Barrett surveyors Barrett, Corp and Harrington (BCH) told us about the risks and pitfalls of underinsurance in terms of inaccurate property valuations.

This article looks into the other reasons that your property could be underinsured. According to the Building Cost Information Service 80% of commercial properties could be underinsured by an average of 60% per property. So if your property is worth £1 million, this could mean a shortfall of £600,000.

A further research survey carried out by Zurich and Insurance Times found that commercial properties are the most likely line of business to suffer from underinsurance.

As the economy continues to change and property owners strive to cut costs, valuations and risk assessments have become less of a priority.

The survey carried out by Zurich and Insurance Times found that there is a serious problem in the failure to carry out regular assessments and valuations within the industry, which could be the main reason for underinsurance. Director and valuation expert Martyn Barrett of surveyors Barrett, Corp and Harrington (BCH) told us more about the importance of property valuations here.

Huge changes to the Building Regulations in the past ten years have seen the cost of rebuilding properties increase considerably.

The cost of rebuilding an existing property has risen due to a number of new regulation factors that would not have existed when it was initially built. These new regulations include the requirement for improvements in energy performance, greater fire protection, the increased cost of building materials and better accessibility. So if your property was completely destroyed and needed a total rebuild it would cost significantly more. The issue is that property owners don’t believe their property has gone up this much in value, but in reality this is not about the market value but the reinstatement value and these are usually two different figures entirely.

Property owners need to consider multiple variables when assessing the adequacy of their insurance cover.

To ensure the sum insured of your building is accurate, there are some variables you could consider yourself as a property owner. This is not an extensive list but some of the questions to consider including:

• What is the age of your building?
• Where is your building located? Is it a conservation area?
• Is your building compliant with current building regulations?
• What construction materials would be needed for a full rebuild? Are these readily available?
• Does your building have Listed status?

For more information about property insurance click here. Our Property Insurance Team has a wealth of experience and knowledge in arranging insurance for properties of all shapes and sizes; and we fully understand the needs of the property insurance market.

Source: Zurich

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