Your buildings sum insured represents the total cost of rebuilding your property from scratch including all professional and demolition costs. The rebuild cost will vary according to the size, age, location and quality of property you have. According to the RICS, rebuild costs index show an increase this year and this can leave you under Insured. This has a negative impact on your claim as the % proportion that you are underinsured will usually be deducted from any settlement in the event of a claim.
You must therefore increase your buildings sum insured against the sum you stated last year. If your sum insured increases, then generally so will your premium. It is often easy for people to leave their Insurance on auto-renew but it is important to review your circumstances to make sure you have the best possible cover.
The cost of building materials and higher demand for labour has seen prices increase over the last 18-24 months. Simple economics of supply and demand. Lower supply caused by Covid-19 and Brexit means in some cases materials are 3 times more expensive than pre lockdown.
Property owners have been spending their money that has been saved whilst they were in lockdown on home improvements, extensions and loft conversions, rather than holidays.
These sharp rises have been fuelled by other factors. Brexit has also exacerbated an already shortage of skilled labour. 26% of skilled building workers were EU nationals before Brexit. There is likely to be a 40% decrease in the number of skilled workers eligible to come to the UK and a 60% reduction in low skilled workers.Fluctuations and weakening of the value of Sterling versus the Euro means the cost of importing is also up. You will be aware there are supply line issues with a shortage of lorry drivers.
When you have a claim, the reinstatement is taking longer because of these challenges. These delays in returning your home to pre loss condition eats into ancillary claim entitlements such as alternative accommodation, where there is usually a finite sum allowed in the policy
You therefore need to ensure your rebuild VAR ( value at risk) is correct to start with. Around two thirds of homes are insured for less than 70% of their rebuild cost which leave any claim in the realms of being penalised due to underinsurance.
Oakleafe claims can help. We don't just provide claims management in the event of a fire or water damage. We have in house RICS affiliated surveyors that are well versed on how Insurers value a building in the event of a claim. We can provide a building valuation from a Surveyor that will ensure you are adequately covered.
There is usually an industry standard contingency of 15% on your sum insured for your buildings figure but anything bigger than this in terms of underinsurance will mean the application of average.
The cost of a professional valuation of your property will be cheap if you are unfortunate to suffer a claim and you avoid the penalties of underinsurance.
If you have been declined while trying to claim on your domestic or commercial insurance, we can help. We can also help with professional services, for example, Brokers, VAR Valuations and Managing Agents.