Insurance Feature Insurance
indepth
Why you need an up to date valuation
example, building regulations which may result in higher costs for some works. One of the worst cases we ever came across was a block of flats in Glasgow. When they switched to us, we noticed what looked like an anomaly in their BDV. A valuation revealed the block was underinsured by over £1m – a staggering 24% of its value! While legal action might be taken against the individuals arranging the cover, this doesn’t help where the leaseholders each own a share of the freehold! How do you determine a current BDC? On first switching to a new policy, it’s advisable to have the building professionally valued. Your new insurer may require you do so. What about buildings sum insured? Don’t be confused by the ‘buildings sum insured’ (BSI) figure on your policy documents. This is your BDV plus an amount that takes into account factors such as inflation, changes in buildings regulation requiring more costly works and currency fluctuations (a lot of building materials are sourced overseas). Let’s say you take out a policy on 1 January and suffer a loss on 31 December. There’s been a whole year when costs may have risen. It could then take a lot more time — up to two years if it’s a large block — to reinstate it and all the time costs could be creeping up. Remember that it is your responsibility to check your BDV is accurate. This is why it’s worth considering using a specialist flats insurance broker. Get your BDV right, and you could enjoy the peace of mind that comes from knowing you are adequately covered.
M ost people understand the importance of getting their insurance proposal right and want to avoid the risk of finding that they are not fully covered because of an omission or error. We’ve all heard horror stories about holidaymakers falling ill abroad and finding they are not covered because they didn’t tell their insurers about a known medical condition. With buildings insurance, while you may be unlikely to find you are not covered, you could find that insurers are not prepared to pay out 100% of your claim if you have not insured for the right amount. And this might happen if the buildings declared value (BDV) you declared is inaccurate. For example, if you insure for 50% of the correct value of your property, only 50% of your claim could be paid. BDV is the cost of completely rebuilding your property following a total loss. The onus is on you to make sure that the BDV is
as accurate as can reasonably be expected. While insurers will automatically index link the sum year on year, it is worth checking that it doesn’t need readjusting every few years. Why? While index linking should account for changes in the costs of materials, it won’t necessarily allow for changes in, for left to collect dust it could cost you, writes Donna Hunter If your buildings declared value (BDV) has been
Donna Hunter is underwriting manager at Deacon
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