What does buildings insurance cover?
Buildings insurance will typically cover you to reinstate any damage to the structure of the building, as well as the fixtures and fittings inside. The cover also provides for costs for removal of debris and repair of underground services following an insured incident, as well as professional fees incurred, for example architectural drawings and surveyors fees. In fact, it will cover you against all the insured events that are specified within your policy. This could include storm, fire, flood, malicious damage, riot and civil commotion, burst water tanks and many more. You can also add extras such as subsidence and terrorism cover to suit your requirements. The rebuild cost of your building will take into account all of the services required to reinstate your building to its specification prior to the loss.
How do I determine the rebuild cost of my building?
When buying insurance, you will also be asked about the rebuild cost of your building. This will take into account materials and professional fees to reinstate your building. The rebuild cost of your building can be influenced by a number of things, including size, construction materials, and age of the building. The rebuild cost is very different to the market value as the market value is generally higher as it includes the land the property resides on. However, in some rare cases, the rebuild cost of a building can actually exceed the market value, for example due to it being a listed building. When calculating the rebuild cost of a building, it is essential that you consider the removal of debris, professional fees, materials and labour. If you are unsure, then seek the advice of a professional builder or architect to get a clear understanding of the cost of rebuilding your premises. There are rebuild calculators available on some sites online, including The Association of British Insurers rebuild calculator. These type of calculators can provide you with an approximate value, but may not take into account all of the specifics.
I rent premises – do I still need buildings insurance?
Generally speaking, it is the responsibility of the landlord to protect their own property, however from time to time, it can be written into a lease agreement that the tenant will insure the building on behalf of the landlord. This will have formed part of the rental negotiations prior to signing the lease agreement, and if this is the case, you can usually add the buildings cover to your business insurance, including the landlord as an interested party. This means that if something happened, your landlord would be recognised as having a financial interest in the property, and would be compensated accordingly in the event of a claim.
Is building cover compulsory?
Whilst buildings cover is not a legal necessity, it is essential to think about the consequences of a total loss and how you would recover financially. Do you have the capital to rebuild your premises from scratch? Is it worth taking on the risk yourself in comparison to the price of buildings insurance? It’s important to think of other eventualities that could give rise to a claim. For example, if a slate fell off the roof in a high storm and hit a passer-by, they could suffer substantial injuries and may pursue a liability claim against you. Buildings cover can protect your liabilities as well as more common perils of fire, flood and storm damage.