Why does the recommended sum insured have to be so high?
All high-value buildings insurance policies cover not just the main house and the drives, paths, patios, gardens, boundary walls and fencing, but also all the outbuildings and other features such as swimming pools and tennis courts. In many cases, the extra cost of rebuilding these additional features can be very high. For example, there have been cases where the cost of rebuilding boundary walls actually exceeded the cost of rebuilding the main house.
Generally speaking, rebuilding costs tend to be far more expensive for older properties-particularly those that are listed buildings. At the same time, insurance policies have to allow for rebuilding to the same specification as existed prior to the claim, with all the work being carried out in accordance with current building regulations.
As you’ll appreciate, this can prove expensive. As an example, a house built of stone may cost as much as 50% or more to rebuild than a house built of brick. Moreover, with many older properties having been built on inadequate foundations compared to today’s standards, policies have to allow for the cost of new, regulation-compliant foundations.
Policies can also provide cover for the cost of demolitions, debris removal and architects and surveyors fees, all of which must be factored into the rebuilding costs, thus raising the sum insured to higher-than-standard levels.
Why can’t I apply the BCIS reinstatement rates to my house?
For many years, the rebuilding costs for domestic property insured in the UK have been calculated using data provided by the Building Cost Information Service (BCIS).
However, while the BCIS data provides a very useful guide and benchmark for most ‘standard’ homes, it’s apparent that, for many high value or unique properties, BCIS’s recommended costs do not match the sums required for the reinstatement of expensive refurbishment work and interior design schemes introduced by property owners. BCIS bases its costs on standard models. High-value and unique properties often have higher levels of specification that need to be taken into consideration.
I have contacts that suggest I could rebuild my property for a lower figure than you suggest. Why can’t I insure at that level?
The rebuilding costs used for insurance purposes have to allow for the cost of demolitions and debris removal. If you built or have re-built your property, you may not have included this within your calculations.
Equally, if your property is listed or has a number of heritage features, it can often be very expensive and time-consuming to record, photograph and even label the fabric of the building to ensure the correct reconstruction.
How do you arrive at a reinstatement assessment?
Costing data is obtained from a variety of sources, but suggested rates are not used without referring to other evidence found on site. Building rates applied take into consideration a range of factors starting with the type, size and quality of materials found at your home. Allowance is made for special features found in each property, for vernacular materials where relevant, and for architectural details.
Outbuildings and hard landscaping are also included in the assessment. If particular features, such as a conservatory or tennis court, have been added, these costs will be factored in.
Other points, including the specific location of the building, will also be factored into the cost analysis. If, for example, your home is in a rural location and some distance from key suppliers, or if access is restricted in some other way, there will be an increase in materials delivery costs, which will have to be taken into consideration.