Underinsurance continues to be a concern in 2023. When you insure a building, it is your responsibility to decide how much to insure it for. A broker or insurer cannot tell you this amount, but we can recommend valuation services.
You need to insure for the cost to rebuild the property from scratch; this will also need to include additional costs like fees, demolition costs and ground clearance.
It is important to ensure your building is insured for the correct amount. If you are over insured, you may be paying too much for your insurance. If you are underinsured, it could result in devastating consequences for you, should you need to make a claim.
Increase in reinstatement costs
If your property is destroyed through some kind of accident, it will need to be rebuilt. The insurer needs to know how much to pay out in order to rebuild your property. The reinstatement cost is how much you will get from your insurer to cover the cost of demolition, site clearance, professional fees, labour and materials.
The price of many construction materials has increased over the years. The same applies to labour costs as inflation has impacted the cost of living and wages have had to rise too. When all the costs are combined, it will cost more to rebuild a property now than it did just a few years ago, or possibly even last year.
How do you know if you are underinsured?
Get a professional valuation. Working out the true cost of a major claim is complex. But having to pay more than you bargained for – or waiting longer than you thought to get back up and running – could leave you struggling.
It can also be difficult to stay on top of the market conditions that could affect your insurance – such as labour shortages, rising material costs, or wider supply chain issues. It is important to tell us about any changes you have made to your property such as alteration and extension.
Please get in touch with one of our insurance experts to talk to us about your property insurance requirements and being adequately insured.
Published Oct 2023
Ramesh is a proven Case Manager & Paraplanner with more than 6 years of experience under his belt. He proactively manages mortgage applications and gets the paperwork done promptly and precisely so that the company's high standard of customer care is maintained.