Landlords are being warned they could be leaving themselves significantly underinsured if they fail to reassess rebuild costs after carrying out renovation or extension works.
Specialist firm RebuildCostASSESSMENT.com says many landlords and homeowners mistakenly assume smaller-scale improvements will not materially affect the rebuild value of a property.
However, the company warns that extensions, loft conversions, upgraded heating systems, roof alterations and retrofit projects can all substantially alter reinstatement costs.
Material alterations could also increase costs linked to rebuilding, site clearance and compliance with modern building regulations.
REBUILD COSTS
Sharon Masters, Technical Lead and Surveyor at RebuildCostASSESSMENT.com, says: “It’s a common misconception that smaller renovation projects won’t affect the rebuild cost of a property.
“However, modern materials, additional rooms and system upgrades can all alter reinstatement costs, sometimes quite substantially.”
Over-insuring properties could also create unnecessary costs for owners and raise concerns around fair value requirements under the FCA’s Consumer Duty rules.
And failing to update insurance cover after works are completed could leave owners facing shortfalls if they need to make a claim.
RebuildCostASSESSMENT.com says brokers should routinely ask clients about planned or recently completed works both at renewal and during policy terms.
The firm also urged property owners to notify insurers before structural works begin and arrange updated rebuild cost assessments once the final specification is confirmed.
RULE OF THUMB
Masters adds: “Even relatively modest works can alter reinstatement cost where they change regulated elements, specification, labour demand or safety requirements.
“That is particularly true for retrofits, cladding-related work and more complex buildings.
“A useful rule of thumb is to review the rebuild cost when works change the floor area, roof form, layout, external envelope, services or the build quality.”
The company says projects including extensions, loft conversions, replacement windows, added kitchens or bathrooms, heating upgrades and cladding improvements would usually justify a fresh rebuild cost assessment, while cosmetic decorating and minor interior works typically would not.
