Insuring Listed Buildings

The Rebuild value of a Listed Building is often higher than Market Value and this matters when you are looking for insurance

In complete contrast to modern buildings the re-build cost of a listed building often far outweighs the market value of a property; despite this many owners still base their insurance value on the mortgage value of a property (usually the minimum insurance requirement for a modern building).  Others will turn to the Royal Institute of Chartered Surveyors’ Building Costs Information Service.  While the BCIS estimates are generally accurate they are calculated to meet modern standard construction costs so they are not suitable for older non-standard construction.  In fact the BCIS has stated that ‘ Houses which are not of modern materials and are required to be reinstated exactly are outside the scope of the guide ‘

Estimates for the number of listed and period properties in the UK that are undervalued and underinsured vary from 50% – 80% but how does this affect an owner when the re-build value is too low?  Not surprisingly it can have very serious consequences in the event of a claim.  If you have undervalued your property your insurer is entitled to reduce their settlement by the equivalent percentage, which means that you will not receive the full cost of reinstatement.

If you are considering the value of a listed building for insurance it is essential to think about what the real costs of materials and work would be if staircases, iron-framed windows, fireplace surrounds and all the other decorative details had to be reinstated following a fire or flood.  Most brokers and insurers would advise employing a professional surveyor to assess the re-build value; one that has specialist knowledge of listed and historic buildings.

In the same vein, it is also worth finding an insurer that understands heritage buildings, specialist insurers will often employ their own surveyor at no cost to you because they want to assess the risk accurately.  Insurance brokers, who act independently and review the whole market, can advise on this and help you find tailored insurance that meets your requirements, they will also understand the unusual risks that a listed building can be exposed to such as fire risks relating to wood burners, open fires and thatch for example and can advise accordingly. Policies for heritage buildings are not necessarily more expensive than  ‘off the peg’ policies and they offer reassurance that you are properly covered – if you choose an agreed value policy the insurer will guarantee to rebuild exactly, regardless of the final bill.