Block of flats insurance pitfalls

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.