Will your insurance policy actually protect you?

BUILDINGS INSURANCE often forms a large part of any building service charge. It would not be unusual for the building insurance premium to represent some 40% of the total outgoings, and this often leads to a service charge disputes at the Leasehold Valuation Tribunal. Therefore, it is important to ensure that correct buildings insurance cover is secured and in particular that the sum insured is adequate.
Great care is often taken to shop around for building insurance but very little thought is given to the actual sum insured. The Association of British Insurers (ABI) says: "the sum insured is the maximum the insurance company will pay out, if everything is totally destroyed by fire or flood.‚  You need to make sure that this is enough for you to replace everything"

Take for example one residential flat which was in dispute with their insurers as they were proposing to pay out only a proportion of a claim on the basis that the sum insured was insufficient. The valuation was prepared for the two blocks of flats in Essex at just over £2m, and you may be shocked to hear that they were currently only insured for some £890,000.‚  It is perhaps fortunate that there was not a more substantial claim!‚ 
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It is advisable to use the services of an expert when calculating the value of your block of flats for insurance purposes. Under insurance is a serious risk and directors of resident managed companies can be liable if they have not exercised due diligence and care in discharging their responsibilities. Research by the ABI shows that one in five homes may be under insured.
It is commonly thought that because many building insurance policies include an inflation provision there is no need for the value to reassessed regularly. When asked to advise brokers sometimes find that the value was never properly assessed in the first place, or that the inflation provision does not accurately represent the real change in reinstatement costs.
A Chartered Building Surveyor will be able to give you a professional valuation of your property and detailed advice on other matters affecting the insurance of property. Given the risks if a building is under insured, taking professional advice in respect of a buildings reinstatement value is essential.