Most of the UK’s listed buildings are significantly underinsured, exposing owners, brokers and insurers to substantial financial and legal risk according to new analysis from RebuildCostASSESSMENT.com.
The firm’s latest industry report found that nearly four out of five Grade II listed properties are insured for far less than their true rebuild cost.
On average, cover extends to just 64% of the amount required to reinstate a listed building following a major loss, leaving large potential shortfalls in the event of a claim.
The findings raise concerns for advisers as well as property owners, with the report warning that inadequate guidance on insurance values could result in disputes, uninsured losses and possible claims of negligence against brokers.
MISUNDERSTOOD
Johnny Thomson, head of strategic planning at RebuildCostASSESSMENT.com, says listed buildings are frequently misunderstood when it came to insurance.
“Listed buildings come with strict conservation requirements, specialist materials and heritage construction techniques that make them vastly more expensive to reinstate than a standard property.”
He adds: “Many owners mistakenly insure based on market value rather than rebuild cost, leaving a significant and dangerous gap in cover.”
DRIVING UP COSTS
The report highlights how conservation laws across the UK require listed properties to be rebuilt using original methods and materials, often under the supervision of local authorities or heritage bodies such as Historic England and Historic Environment Scotland.
Where part of a building survives a loss, insurers are typically required to reinstate the remainder to the same historic specification, limiting the use of modern substitutes and driving up costs and timescales.
RebuildCostASSESSMENT.com says confusion between sale price and reinstatement value remained one of the primary causes of underinsurance.
Rebuild costs, it says, must factor in specialist labour, heritage-approved materials, professional fees and extended repair periods.
“Accurate and regularly updated rebuild cost assessments for listed buildings are absolutely essential,” Thomson adds. “Without this, both owners and brokers are at real risk.”
