Time for your re-instatement building quote? Read this first!

Time for your re-instatement building quote? Read this first!

0:01 AM, 30th March 2023, About 11 months ago 8

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Hello, If it’s time for your re-instatement quote for your block building insurance please learn from our mistake. We have just had our insurance re-instatement done which involved a site visit by the insurance broker.

Our block of 7 flats and 1 commercial unit are in Harrogate town centre, North Yorkshire. Imagine my astonishment when our RTM accounts lead informed me as a Director of the RTM that as a result of the quote, our block had been re-valued as 2.2 million for a re-build moving from the previous figure of £900,000!

Worse still, this revised figure was sent to our insurance broker who then upped our premium by over 100%.

I was so shocked that I immediately contacted a local surveyor in Harrogate and sent him this re-investment quote. He does many similar blocks in Harrogate and is very experienced. He immediately concluded that the figure, in his opinion, was 1 million pounds too high and that the figures quoted being much too high per metre for the re-build.

Naturally, I challenged the insurers but they stand by their figures! We are of course now going to instruct the local surveyor to produce another report which is estimated to be around a value of 1.2 million not 2.2 million!

This will then reduce our insurance premium to an acceptable uplift and not over 100%.

I just wanted to advise everyone to use, where possible, a local surveyor and, if possible, get more quotes as the difference can be huge. We have now paid £540.00 for the first quote and have to get another but at least we will bring down our premiums.

I’m advised that this is now a common thing whereby re-instatement quotes are done at the higher quartile per metre as insurers are getting windy re re-build costs.

The irony I find is that insurance is about risk and likelihood but what are the chances of any of our blocks being reduced to a complete re-build?

I bet about 100,000 at least to 1 but this never stops the greed of some and at our, the leaseholders, expense. Unfortunately we all have to have them done but be very careful who you choose!

Thank you,

Terry


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Comments

Judith Wordsworth

11:37 AM, 30th March 2023, About 11 months ago

Shop around for reinstatement valuations and building insured values surveyor fees.

I recently have been quoted from £500 plus VAT to £1250 plus VAT

Crossed_Swords

12:31 PM, 30th March 2023, About 11 months ago

Why was the first visit done by an insurance broker? Is that what you meant?

Harry Chunk

13:24 PM, 30th March 2023, About 11 months ago

A friend of mine has just built a block of eight flats at a cost of around £1.3m not including land and demolition and site clearance. Be careful about underinsuring.

Graham Bowcock

15:34 PM, 30th March 2023, About 11 months ago

It is a great suggestion to get a reinstatement value done by a qualified building surveyor. As a managing agent with some blocks, it is something that we outsource ourselves (despite being chratered surveyors).

I have never found that increasing the reinstatement value has a massive effect on premiums. Premiums are derived from risk; post Grenfell premiums have risen significantly, even for smaller blocks and those without cladding - insurers just don't seem to like them.

Although I'd take it as read that the surveyor in the post was given all the information, remember that build costs are only part of the value - you need to include allowance for partial rebuild (which can be expensive), demolition, fees, VAT, etc.

There are no prizes for underinsuring and it can be a problem if you need to make a claim.

Seething Landlord

1:06 AM, 31st March 2023, About 11 months ago

Insurers are usually careful to make it clear that it is the policy holder's responsibility to ensure that the sums insured are adequate, so it is rather surprising that brokers and/or insurers have actually recommended what the sum insured should be. Commercial insurances are normally subject to average which means that if at the time of a claim the sum insured is below the cost of rebuilding, the amount payable will be reduced in proportion to the under insurance. The likelihood of the property having to be completely rebuilt is therefore irrelevant.

Trying to save money by insuring for less than recommended could prove very costly in the event of a claim.

JB

12:05 PM, 31st March 2023, About 11 months ago

It seems some re-build costs are now higher than the sum of the value of the flats - even though the plot remains.

Seething Landlord

12:46 PM, 31st March 2023, About 11 months ago

Reply to the comment left by JB at 31/03/2023 - 12:05That has always been a possibility and reflects the fact that the cost of building materials and labour has no direct link to market value.

Terry Scaife

8:47 AM, 1st April 2023, About 11 months ago

Reply to the comment left by Crossed_Swords at 30/03/2023 - 12:31
Yes it is a mistake when it has been edited for input. It was a surveying company from Warwickshire - BCH who originally came out and their surveyor did the original report which has moved from £900,000 to 2.2 million!

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