It’s thought that a shocking 80% of commercial properties in the UK are underinsured. If you are in that 80% and the worst were to happen, then your insurance would not cover the cost of rebuilding it, putting you at significant financial risk. That is why it is essential to carry out a regular rebuild cost assessment.
A rebuild cost assessment is undertaken by a RICS approved chartered surveyor to determine how much it would cost to rebuild a property from scratch, should it be destroyed. It is usually a requirement of a buildings insurance policy.
The subject of underinsurance is particularly critical right now in the wake of Brexit and the pandemic, with building materials skyrocketing in price in the past year. So even if your commercial buildings insurance policy already includes a rebuild cost assessment, it is likely to be out of date if it is more than three years old.
We can’t sugar coat it – it’s a serious issue. But at Glowsure it’s never our aim to scaremonger, but to offer advice and take decisive action on your behalf.
Contact us today, to make sure your your protected correctly with underinsurance across all your commercial properties.
We’ve produced this article to explain how to go about obtaining a new cost assessment for your commercial building(s), and how we can help.
Where can I find the most recent cost assessment of my building(s)?
The rebuild cost of your property can be found on most mortgage valuations. If you are fortunate enough not to need a mortgage, you must carry out a rebuild cost assessment to meet the terms of your buildings insurance and to ensure you have adequate cover.
While you could wait until your annual renewal, it is wise to take prompt action if you think your property may be underinsured.
Book a professional building insurance valuation, which must be carried out by a regulated RICS company for buildings in England, Wales and Scotland.
What happens if my property is underinsured?
It’s vital that your insurance policy covers the cost of rebuilding your property in a worst case scenario. If it doesn’t, then you will you have insufficient funds to rebuild your property in the event of a payout. Ouch.
What’s more, you will also be subject to the Insurer’s Average Rule. Double ouch.
What is the insurer’s average rule?
The Terms and Conditions of most buildings insurance policies will include what insurers call the ‘average’ rule. This means that whatever amount you are underinsured for your insurer can – and will – reduce your claim by the same percentage.
Example of insurer’s average rule
Let’s look at how this would work in reality:
- Your building is insured for £150,000, but it should be insured for £300,000, meaning that you are underinsured by 50%.
- You make a claim for £50,000 but because you were underinsured by 50%, the insurer only pays you 50% of the claim which is £25,000.
Clearly, for even the most wealthy commercial property owners and landlords, this can present a significant financial risk and put your business in jeopardy.
What is the process of a rebuild cost assessment?
How are rebuild cost assessments carried out?
The rebuild cost of a property must be carried out by a RICS surveyor, either by physically inspecting the site, or by desktop evaluation. Which method will depend on factors such as the size of the building and if it is listed, eg. Grade 1.
How are property rebuild costs calculated?
A RICs surveyor will calculate the rebuild cost of a property taking into account numerous factors, such as:
- Type of building (eg. block of flats, detached, semi detached or terraced)
- Whether commercial or residential materials are used
- Labour costs
- Professional fees (eg. solicitors, surveyors)
- Demolition and site clearance
- Removal of other structures on the land (such as garages, sheds, orangeries, greenhouses, pumping stations or pool rooms)
- Size of car parks
- Number of walls and gates
- VAT on materials and services
How much will a property evaluation cost me?
There is of course a cost attached to a professional insurance evaluation, but it is money well spent when you consider the consequences of underinsurance.
Costs will vary depending on the size and number of buildings. Glowsure can offer professional rebuild cost assessments from £146 including VAT.
What exactly do I get for my money? Is there a report?
Following the inspection/assessment, you will receive a comprehensive rebuild cost assessment report, with a calculated value of rebuilding. You can then use this to help determine an adequate level of insurance cover for your building.
The report provides a full breakdown of all calculations, backed up with building measurements, pictures and maps.
Glowsure is here to help you with rebuild cost assessment
The underinsurance of commercial properties is a significant issue, and at Glowsure, we regularly voice our concerns from the rooftop! We are here to help ensure that all of our clients are fully insured to the right value, should disaster strike.
We can offer a rebuild cost assessment to any existing commercial building insurance policies sold by us and any new policies, whether it be for vacant properties, offices, industrial units, houses, shops or blocks of flats.
Get in touch with us today for more advice and to book a rebuild cost assessment service, from just £164. Why not contact our insurance superheroes today to request a call back about our rebuild cost assessment service.
How much does it cost to rebuild a house UK?
The UK is home to a vast array of property types, built over the course of decades. So it is impossible to put an average figure on the cost of rebuilding a house. That is why it is essential to have your property professionally assessed by a RICS surveyor for insurance purposes.
Will a rebuild cost assessment tell me if I am underinsured?
A rebuild cost assessment is essential to mitigate your risk of underinsurance and will provide you with a rebuild calculation. You can then use this calculation to determine how much insurance you need. If you are in doubt, it is wise to speak to a reputable insurance broker.
How long will the assessment take?
While a rebuilding cost assessment can take as little as 3-6 days, there is currently significant demand for the service, so you may find it takes a little longer.
Does the assessment take outbuildings into account?
Your report will include all outbuildings such as sheds and garages, as long as they are in the boundaries of your property.
How will a rebuild cost assessment affect my insurance premium?
This all depends upon the findings of the report and the subsequent action you choose to take. For example, if the report indicates you have insured your property by too much, you may be able to reduce the sums insured on your property, which in turn could lead to a lower premium.
Conversely, if the report indicates you have not insured your property for enough, you may need to increase the sums insured on your property, which in turn could lead to a higher premium. It is important to remember that the potential financial impact of being underinsured could be severe in the event of a claim.
To find out more about rebuild cost assessments, contact Glowsure today!