Changes to how Buildings claims are settled

Posted on by Anthony Wakefield

Some insurers have been changing the basis upon which they settle claims for Buildings claims. In general, they are extending and improving the scope of cover provided.

For example, one of our Buildings2Insure Partners, Sterling Insurance, have updated their Executive Home and Executive Plus policies to take into consideration the latest technologies, such as Solar Panels and Geothermal or Wind Powered sources of energy. One of the features of the policies is to allow for the extra cost of purchasing power from traditional suppliers under certain circumstances when, for example, Solar Panels have been destroyed. They will also contribute up to £2,500 (£5,000 under the Executive Plus policy) for Environmental home upgrades such as Solar Panels, following a major loss, showing their growing interest in socially conscientious underwriting!

One of the key concerns that has arisen from the winter floods and recent fire claims is the length of time that a client can have to be in alternative accommodation. Sterling offer up to 3 years cover under their Executive Home policy and 5 years under their Executive Plus policy for both Alternative Accommodation and Loss of Rent.

The policy details are featured on the Policies page of our Buildings2Insure site.

Whereas many improvements have been made, insurers in general are now making it clear that the sum insured for Buildings cover should include an allowance for Architects’ and Surveyors’ fees and in particular for the 20% VAT now applies almost ubiquitously to refurbishment and reconstruction costs.

Even though most insurers will not penalise you for being innocently underinsured in the event of a partial loss, some insurers do and it is not worth taking out a policy without accurately assessing your rebuild or replacement costs.

While RICS and BCIS used to offer a useful free rebuilding cost calculator, this now appears to have been replaced by a fee based service and the best way to find out the rebuilding cost of your home is to consult a Chartered Surveyor.

Under their Executive Plus policy Sterling offer Extended Replacement cover which allows clients to claim for more than the policy sum insured provided that an approved professional valuation has been carried out less than 5 years before the date of loss. When taking out such a policy, please consider the free appraisal service that they offer. With the Executive Home policy clients have to pay for appraisals and we would recommend our Partner Valuers, such as Nick Orringe of Arbiter, for this purpose as they can give you a wider scope of advice than just a simple valuation.

Choosing High Net Worth policies rather than standard ones will cost more in the first instance, but the long term benefits and more comprehensive claim and valuation services that go with them are likely to be seen as a wise investment if things go wrong!