There are many reasons for clients calling us in to act as Loss Assessor for their insurance claim. All too often, it’s because the Loss Adjuster has told them they’re under insured and has invoked the Average clause, meaning they’ll be paid less than expected.
This most often results from using an old valuation in the insurance policy. It’s not unknown for a 30-year-old valuation to be used, though in today’s volatile property market even a two-year-old one could be worthless. This will mean the building is under insured, and the Loss Adjuster will only allow a proportion of the insurance claim.
When you’re establishing how much to insure a building for, first find out the current building costs that would be required, either by speaking to a local contractor or by checking the RICS (Royal Institute of Chartered Surveyors) website.
Then add a few percentage points — we all know this figure will have increased by your next renewal date.
You also need to take account of any additions or alterations. In any case, the policy holder is obliged to inform the Insurer if any alterations are about to be made. It could help you, too, if you need to take legal action against a contractor for causing damage through bad workmanship.
And finally, remember not to include the value of the ground in your building insurance. You’re insuring the building, not the ground it’s built on, and you’ll be paying extra premium for nothing.