Building sum insured is the cost of rebuilding the property if it was completely destroyed. Commonly people insure their property at the retail market value which is what they would get if they sold their property. In the event of material damage to the property following a fire or a leak, the loss sustained is the cost of repairing the damage. This is what your sum insured should be based on, making sure you avoid underinsurance.
Your building sum insured must include all costs to fully demolish and rebuild the property in full, including all ancillary costs. This involves:
You must also include fees to comply with statutory and local authority requirements such as planning requirements and current building regulations. Remember that properties must be returned to current codes not as they were built originally.
Building sum insured is largely impacted by the cost of various material prices. We have all seen the increases in labour and materials over recent years so you should always include inflation costs to allow for an increase in building repair costs during the period of construction. Professional Fees for architects, surveyors and engineers are also included, and therefore have a significant impact.
Another factor that affects building sum insured is the type of property. For examples, the rebuild of a block of flats might include the whole building, and so it can be difficult to calculate an estimate.
It is your responsibility as the homeowner to ensure that the sum is the correct figure. With extreme weather becoming increasingly common in the UK, more homeowners are experiencing tragedies such as severe flooding and fires that require the property to be rebuilt. It is therefore imperative to ensure that your building sum insured is correct, to avoid being hit with underinsurance implications should the worst happen to your home.
If you do suffer tragedy in your home and need to make an insurance claim, give Oakleafe a call. As award-winning Loss Assessors, we can put you and your home on the road to recovery and ensure you get the most out of your claim.
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.