Morgan Sloane

Is your building properly insured?

Whether you own a single property or have a vast portfolio, ensuring you have the correct insurance cover for your building is imperative. 

For private sector landlords, insurance is a necessary business requirement. You may find that your rented properties are at a higher risk than the home you live in. As the tenants do not own their home and only rent it from you, they may feel less responsible for safeguarding the property. However, as a landlord, you’re still responsible for insuring the building.

It’s crucial that you understand the difference between Buildings Declared Value (BDV) and Sum Insured when discussing insurance – both will be referenced on your policy document.

What’s the difference between BDV and Sum Insured?

Your policy will include two values: Declared Value (BDV) and Sum Insured.

The BDV is the total cost to rebuild your property from day one of the policy after a total loss. If your BDV is £700,000 and on day one of your policy you suffer a total loss, you would be covered for up to £700,000 

However, the Sum Insured includes an inflationary provision. The value will include the cost to rebuild your property following a total loss and an uplift to cover additional costs of materials, labor and so on during the insured period. If you are covered for £700,000 on day one but you suffer your total loss on day 345, the costs may have increased by 10% so your sum insured will have a value of £770, 000. 

We advise getting your property revalued every three to five years with a reinstatement cost assessment (RCA) to ensure you have the correct cover for your building. 

What is an RCA?

An RCA is where your property is appraised to determine rebuild and replacement costs if it were destroyed, such as if there was a fire.

The Royal Institution of Charted Surveyors (RICS) recommends that an RCA is carried out every three years or when there are significant changes to a building, such as if you add an extension or a loft conversion.

The reason we advise regularly getting your property revalued is ensuring you’re not left under-insured. To avoid being under-insured, ensure you:

  • Never rely on the market value of your house when estimating how much you should be insured for 
  • Answer any questions from your insurance company truthfully and be specific as to what you want to be covered by your policy
  • Tell your insurer if there is a significant change to your property
A professional valuer will give you an honest value. A revaluation will normally be completed by a professional surveyor – think of it as a ‘health check’ for your property, just in case.

Have a question about RCAs or ready to book your assessment? Contact us.

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