Gemma Worton by

Posted on February 16, 2014

Property Insurance policies provide for the property to be reinstated in its current state in the event that it is damaged by an insured peril i.e. Fire, Flood, Storm etc.

Before the policy can be issued, it is vital that the correct sum insured is assessed and advised to insurers for two main reasons.

Firstly – the sum insured is the total which will be paid out in the event of a claim – so if the rebuild cost exceeds the sum insured then insurers will apply the average clause as detailed in our last blog.

Secondly, insurers will calculate the premium  based on the rebuild cost which is advised to insurers.

In arriving at the correct sum insured for each property it is vital that a RICS qualified professional is consulted as he will have the specialised knowledge to take all the elements into account such as construction type, hazardous materials and any restrictions on future rebuilding in the event of damage – such as properties holding listed status.

A vital part of this assessment is the amount allowed for the removal of debris in the event of damage.

It is not only the construction type which can influence this – for example the removal of asbestos before rebuilding can commence.  External influences also need to be taken into consideration.  A property may be in the middle of a busy city where access is restricted.  This will increase the difficulty – and therefore the cost – of any rebuilding work.

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