Commonly asked questions – Property Insurance

What is the difference between a sum insured and declared value? Do I need D&O cover? My property is vacant – what do I do? Subsidence history? Structural works planned?

Whats the difference between the buildings declared value and the buildings sum insured?

Policy schedules refer to both; declared value is the insured’s estimate of the property’s actual reinstatement value together with provision for professional fees and debris removal on the first day of the insurance. The sum insured is this declared value plus an inflation provision of (say) 25%, to counter effects of inflation and increased construction costs from the first day of the policy through to when the repairs are completed. This percentage increase will depend on the type of structure and length of time to rebuild the property.

How do I know the rebuilding cost of my property, who can help?

An accurate valuation is absolutely vital for, if a property is under-insured, it will result in insufficient cover and, equally, over-insurance means you are paying too high a premium. RICS surveyors have specialist knowledge and experience and will be able to advise you.

I am an unpaid Director of a Residents Association. Do we need Directors & Officers Liability Insurance?

Directors & Officers of Residents Management companies (whether or not it’s a limited company) are at risk of being sued personally. The law does not recognise a difference between voluntary Directors & Officers of Residents’ management companies and commercial companies. Ignorance of the law is no defence.

My property is vacant. Do I need to tell my broker/insurer?

You are obliged to inform your broker/insurer when a building (or part of) becomes unoccupied. Unoccupancy terms that need to be observed are set out in your policy booklet (e.g. turn off all main supplies, inspect weekly). Failure to comply could prove problematical if a loss occurs.  Unoccupancy is an increased hazard and an insurer may choose to limit cover because of the possibility of vandalism or malicious damage occurring.

Structural refurbishment works are planned for my property. Do I need to tell my broker?

It is important to notify your broker/insurers if works of a structural nature are planned for your property.  This allows insurers to consider if the proposed works create additional hazards and it is also important your insurers have confirmation of the contractor’s public liability insurance. If you fail to notify your insurers and have certain contractual insurance obligations under your agreement with the building contractor, this may result in you being financially penalised in the result of a loss. In the event that you enter into any contract with regards to work on your property, report it to your insurer/ broker to be on the safe side.

I let out my leasehold flat and the freeholder arranges the buildings cover, so do I need to arrange any insurance myself?

Letting your flat may affect the Buildings Insurance so you should check with the freeholder’s broker/insurers.  It is recommended that you check your own contents policy gives you sufficient cover for your responsibilities under the terms of the lease and you should advise the tenant that they need their own home contents insurance for their own belongings and furnishings they bring to the flat.

If my property has had subsidence or been underpinned, do I need to tell anyone?

If you are aware that your property has suffered from subsidence or has been underpinned, you will need to tell any prospective insurer.  If there is a  detailed structural engineers report available, this should be provided to insurers.  From this they will be able to ascertain the extent and cause of the damage, what repairs have been undertaken and the surveyor’s opinion as to whether or not the problem has been solved. If you don’t tell the insurers and a problem of a subsidence nature arises in the future, it could be deemed non disclosure of a material fact and lead to declinature of the claim.

For further information contact your normal Centor contact or Tony Efreme (Property Manager) on 020 7330 8705