Block of flats insurance pitfalls

Block of flats insurance pitfalls hot topic = underinsurance

First thing- a very large and important topic at the moment is underinsurance.

As you know, last year has resulted in the costs of building materials rising due to, obviously, supply and demand issues and currently, obviously, there’s a war going on with Ukraine and Russia. All these things combined creates a perfect storm with regards to building costs and supply issues, etc.

That’s resulted- especially since the pandemic it’s resulted in costs going up, possibly between 20 to 30%, for different types of building materials. As a result of this, what we’ve got in the UK at the moment and Northern Ireland. It’s a lot of building materials, and buildings themselves, especially blocks of flats are now underinsured.

Block of flats insurance pitfalls

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For example, if you took a high-rise block of flats in London that maybe costs a couple of million to rebuild, straight away, it’s 20 to 30%, underinsured and say that was to suffer a total loss such as a fire, you can do the math yourself.

You realize that if that property was to be rebuilt, well then, you’re 20 to 30% down on the total cost that you’d insure the building for. That’s creating an issue where insurers are coming in, surveying the damage and saying,

“Well, look, your property is underinsured here at the moment so we’re going to reduce your claim by 20 to 30%.”

I’d say that applies to total losses, but it also applies to even smaller claims, maybe there’s escape of water. If the building is 20 to 30%, under insured, and maybe you have a claim for a water leak, something like that, it may cause £5000 in a block of flats, it can even cost 20,000- the block of flats, quite easily.

It just simply means they’re going to reduce your claim or your claim’s pay out. That is a massive pitfall moment and there is a way around this. Obviously, when you get your renewal out, or customers get their renewals, they should be checking their sum’s insured, and they should be going to get the property surveyed.

It costs a couple of pounds to do that, we all know, but you know, the benefit in the long run that is obviously clearly there to see because if you’re underinsured, it means you’d all get your still claim settlement.

Underinsurance is the most important block insurance pitfall at the moment and it is literally on all insurance brokers lips.

We’re always telling our customers, you must check your rebuilding cost. It’s up to you, we are not surveyors, we’re insurance brokers so we can’t give any guidance as to what your rebuild should be, or what the rebuild cost should be. But we can obviously directly apply the importance of contacting a professional. There’ll be a Royal Institute of Chartered Surveyors that can recommend someone in your particular area. That would be the main pitfall at the moment, it’s simply underinsurance. that’d be the first point.

Block of Flats

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Why choose the Property Insurance Centre

Independent broker with staff you can speak to by phone or online

Access to a wide range of insurers to source suitable insurance cover for your needs

Bespoke Insurance Schemes & Portfolio Policies available

We can tailor your policy to suit your exact needs to give you complete peace of mind

Competitive Premiums

Cover available for the buildings while the property is being converted, renovated or extended

Over 40 years experience working with the best insurers in the UK

Excellent communication so that you understand what risks you are insured against

Why choose the Property Insurance Centre

Independent broker with staff you can speak to by phone or online

Access to a wide range of insurers to source suitable insurance cover for your needs

Bespoke Insurance Schemes & Portfolio Policies available

We can tailor your policy to suit your exact needs to give you complete peace of mind

Competitive Premiums

Cover available for the buildings while the property is being converted, renovated or extended

Over 40 years experience working with the best insurers in the UK

Excellent communication so that you understand what risks you are insured against

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