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Top mistakes when insuring your listed b...

27 March 2024

Top mistakes when insuring your listed building

By Vikki Rushbrook Insurance Advisor

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Understanding listed building insurance can be a challenge. Many potential mistakes can leave the owner high and dry when it’s time to make a claim.

These errors can be costly. From underestimating the rebuild cost to neglecting the fine print, it’s crucial to get insurance right from the start. After all, your listed building isn’t just any property – it’s a piece of history. Let’s look at the most common mistakes to avoid when insuring your listed building.

1. Underestimating the rebuild cost

A common pitfall when insuring a listed building is underestimating the rebuild costs. Many owners assume the rebuild value should equal the property’s seller price. This is incorrect and will result in underinsurance.

The rebuild cost encompasses various expenses not considered in a property’s valuation. They comprise the cost of specialist building materials, expert labour, and any archaeological survey fees that may be required.

Given their age and historical significance, listed buildings often require traditional building techniques, which can significantly increase their costs.

As a case in point, it’s not unheard of for a listed building with a market worth of £500,000 to have a rebuild price as high as £1 million. This discrepancy certainly underlines the importance of accurately assessing the rebuild cost to avoid any unpleasant surprises should a claim be necessary.

2. Neglecting the fine print

Insurance policies very rarely straightforward; they come with detailed and complex specifications. Understanding these is vital, as they detail what is and isn’t covered under the policy.

For example, many policies for listed buildings have specific clauses for alternative accommodation. If a property becomes uninhabitable due to a claim event, the policy will cover the cost of alternative accommodation while the property is being repaired.

But some policies might set a limit for such costs.

Furthermore, a number of policies may exclude certain types of damage, like flood damage if the property is in a flood-prone area, or impact damage from vehicles or falling trees.

It’s not just about reading the fine print – it’s about understanding it. This is why hiring a specialist broker who understands listed building insurance makes sense. They can explain the policy in simple terms, highlight any potential issues, and help find a policy that suits both the property and the owner’s needs.

Old building with scaffolding being renovated

3. Failing to inform the insurer of renovations

It’s crucial to oversee potential alterations and renovations for listed buildings and inform the insurer about any planned modifications. All too often, property owners need to be made aware that significant renovations may impact their existing coverage.

When insuring a listed building, it’s always better to be safe. Notifying the insurer before undertaking any changes is a smart move. After all, the owner must ensure their insurer knows the full scope of renovations. Besides, any building alterations may affect the value of the property. Hence, an updated insurance policy needs to reflect these changes.

Many policyholders mistakenly believe their current insurance coverage extends to renovations. But this is only sometimes the case. Certain types of building work and materials fall outside the terms of the existing policy. That could leave the property owner footing a bill they hadn’t anticipated.

To avoid the unexpected, it’s best to plan ahead and keep all relevant parties in the loop. An informed approach minimises surprises, allowing listed property owners to undertake renovations confidently.

4. Ignoring professional valuations

Property owners are encouraged to utilise specialist knowledge when insuring their listed buildings. Professional valuations play a crucial role in correctly insuring a property as they anticipate changes in its value due to renovations.

Accurate valuations safeguard homeowners from underinsuring their listed buildings. If a property is valued higher, it’ll lead to more coverage. This could mean any claim may not provide the compensation needed to restore the listed building to its original state.

Before embarking on a renovation, it’s prudent to engage a professional valuation expert. They will accurately assess the property’s worth, ensuring your coverage is proportionate to its value.

5. Buying standard building insurance instead of listed building insurance

A common pitfall among homeowners is bypassing specialised insurance for listed buildings. Standard building insurance is often inadequate for covering listed buildings unique requirements and risks. Homeowners are left exploring a complicated process and possibly encountering financial perils from underinsurance.

The historic nature of listed buildings often involves higher restoration and repair costs. These buildings require specialist artisans, unique materials, and conservationist-led efforts for repairs and restoration. Hence, it’s crucial to account for these factors when arranging insurance.

Unanticipated costs can escalate quickly if your insurance policy is tailored to something other than your property.

Specialist insurance brokers bring much-needed expertise, providing tailored policies for listed buildings. Their comprehensive understanding of the market, wide range of products, and in-depth knowledge of listed property owners’ needs make them invaluable assets for homeowners.

Let’s also pay attention to the worth of engaging a valuation expert. These professionals effectively capture changes due to renovation, which, in turn, keeps insurance coverage accurate and up to date. Specialist brokers and valuation experts ensure that homeowners are provided with sufficient cover while not being burdened with excessive premiums.

Opting for specialised listed building insurance is not merely an extra step. It’s necessary to access the protection and guidance essential in the complex insurance world.

Frequently Asked Questions

Why would standard building insurance cover be unreliable for listed properties?

Standard building insurance often fails to cover listed buildings adequately due to their distinct requirements. These buildings bear additional restoration costs and need specialised repair, which demands bespoke insurance coverage.

What role do specialist insurance brokers play for listed buildings?

Specialised insurance brokers offer expert guidance, providing bespoke insurance policies tailored to the unique needs of listed buildings. They can navigate the complexities of listed building insurance, ensuring comprehensive protection.

Why is it necessary to engage valuation experts for listed buildings?

Bridging the gap with an accurate valuation is crucial for the post-renovation of listed buildings. Valuation experts accurately reflect changes, which helps ensure homeowners have adequate coverage without facing exorbitant insurance premiums.

Why is it essential to opt for specialised listed building insurance?

Opting for specialised listed building insurance ensures comprehensive protection and expert guidance in a complex insurance landscape. It caters to the specific restoration needs without causing insurance premiums to surge.