Why has my recommended property insurance sum insured changed?

Some frequently asked questions from our customers about the insurance valuations we provide.

The reinstatement value of your property forms the basis of your building’s insurance cover.

The reinstatement value of your property forms the basis of your building’s insurance cover. If this figure is wrong, then you may find your insurance policy will not respond in the way you expect in the event of a major loss.
Barrett Corp & Harrington provides information to help policyholders insure for a realistic figure.
The figure we recommend is the bedrock to ensuring that the clients’ needs will be met and that they have got what they paid for in their insurance policy.
One or more of the following may explain why the recommended sum has changed:

A reinstatement cost assessment has not been undertaken for at least 3 years or not at all:

If the current insurance value is based on a guesstimate, its provenance is unknown, or it has not been valued for a long time, chances are it is now inadequate. Our assessment brings the value back into alignment with current construction costs and trends.

Indexation applied has not kept pace with costing ‘hot spots’ such as London and the South East or is adequately reflected the impact of building regulations requirements:

The Building Cost Information Service (BCIS) publishes national indices used by insurers. Typically insurers take the national average to index the value on a policy. Being an ‘average’ this is not always appropriate and, over time, can accumulate to a significant difference.

Reliance placed on an out of date mortgage valuation or market value:

buildings insurance valuation based on market value
Reliance on an out of date mortgage valuation is often found to be lacking.

Recommended reinstatement values found in mortgage, bank and development appraisals are often found to be lacking and based on a best estimate at the time, along with associated caveats and recommendations for a full assessment. Worse still, the value may have been linked to the market value, which is not related to the insurance rebuild cost.

The insurance value was based on the original developers own build cost or excluded VAT:

These values are often historic and don’t include the cost of the team needed to redesign and supervise reconstruction.

They often don’t include a main contractor’s profit or demolition costs either and may not have included the appropriate VAT liability.

There are extensive external works, outbuildings, hard and soft landscaping:

buildings insurance external works
Extensive external works, outbuildings and landscaping costs are often overlooked.

These costs are often overlooked as the concentration is on the building itself.

External works including tarmac roads, paths and parking, all of which add significantly to the overall rebuild cost should be included within the insurable amount.

The building is on an unusual or restricted site with access and working space issues:

For example, in a city centre, adjacent to a railway line, a restricted position such as pedestrianised high street, a remote location that is only accessible via a weight-restricted bridge or narrow country lanes.

These factors can complicate a rebuild, which in turn means higher building costs.

There has been extensive refurbishment, renovation or ‘green’ upgrades:

If there has been any extension, refurbishment or alteration works, or works that include green retrofitting of renewable and sustainable energy systems, then the sum insured may not have been altered to reflect these works at the time they were completed.

The building is listed or in a conservation area:

These buildings and/or their specific locations are of particular architectural interest. Special permission is required before any works are carried out, and consultants specialising in historical preservation may need to be engaged. Time delays, due to periods of consultation, inevitably impact on the reinstatement cost assessment.

The building was constructed before 1920:

Reinstatement cost assessments allow for a replacement building to be constructed in similar materials and using sympathetic methods. Due to building regulations, further interventions may also be needed e.g. the addition of appropriate foundations and fire protection. This is why we find older buildings are often underinsured.

The building is constructed of unusual or expensive materials, such as stone:

A combination of material costs and specialist labour costs makes these buildings more expensive to construct. Local quarries may have closed and sourcing alternatives could be costly.


Have you got a question about your property insurance valuation? Call the BCH Office on 01455 293510 or contact us by email. We look forward to hearing from you.

Valuation of flats based on ‘average prices’ – what you need to know

Reinstatement cost assessments for flats, average value vs. actual value.

It is rare that two blocks of flats look the same externally and almost impossible for the internal lay out and finishes to be the same. So why would they be valued identically using average rates?

We are often asked why our Reinstatement Cost Assessments (method to provide a valuation of flats) may differ from an ‘average’ price found on search engines, Building Cost Information Service (BCIS) or The Association of British Insurers (ABI) guides.

It is rare that two blocks of flats look the same externally and almost impossible for the internal lay out and finishes to be the same. So why would they be valued identically using average rates?

Here are 4 common factors that affect the valuation of flats:

Structural masonry vs steel impact value of flats
Structural masonry vs steel can have a huge impact on cost.

1.Building Construction

Everyone can appreciate that there is a difference in rebuild cost between a modern and a period built property, however the building pathology itself is often overlooked. Each block of flats is unique and, in order to reach an accurate, RICS compliant, Reinstatement Cost Assessment (RCA), needs to be valued on an element-by-element basis.

The use of structural masonry versus steel frame on modern buildings for example can have a huge impact on cost. In the case of the external walls, examples of the range of finish can be seen from modular cladding with a rendered finish, to heavily glazed or with marble cladding.

These materials range significantly in value, ease of procurement and installation time – therefore impacting on the RCA; these details would be neglected in an insurance valuation based on average rates.

Surface finishes affect the insurance value of property
Surface finishes will affect the insurance value.

2.Level of fit out and specification

Floor finishes, wall finishes, quality of fitted storage and indeed specification of kitchens and bathrooms can vary hugely from development to development.

The value of kitchens in particular can differ significantly, with integrated white goods and appliances being included within a buildings valuation and non-integrated white goods considered a contents item and therefore should be excluded. It’s imperative the quality of these kitchens and their inclusions are accurately valued.

For example, kitchens have a large value range with a small kitchen with chipboard units and a laminate work surface having a far lower value than a bespoke hardwood kitchen with granite or high specification resin composite work surfaces, irrespective of whether their size is comparable.

All of these items would be reinstated in the event of a total loss and therefore have to be included in the RCA in order for the property to be accurately insured.

The value of a flats will be affected by any historic and non-standard finishes
Historic and non-standard finishes have to be allowed for.

3.Professional Fees

Using listed properties as an example, a variety of professionals would be required to ensure its reinstatement is approved by the planning authorities. Other elements such as conservation areas can also increase the fees required compared to a modern, modular new build without these influences.

Non-standard finishes requiring specialist trades can have equal impact to the RCA and the potential requirement of archaeologists, botanists and ecologists for factors not present during initial construction all have to be allowed for.

External items should be included for an insurance valuation for blocks of flats
All external items should be accounted for.


‘Externals’ include all items which are necessary and part of the development but fall outside the external walls of the main building. Examples include: mains utility connections and drainage, parking and bin stores. We have also come across tennis courts, bridges and historic cranes.

It’s imperative all such items are accurately accounted for within the RCA valuation with the rate of tarmac site roads being far lower than block paving. Items of larger impact can include structures such as garages and general stores, electricity substation housing and boundary markers.

Boundary walls and walls within the curtilage are also to be included, with a stone wall costing more than brick and retaining walls, be they sheet metal piled, concrete, brick or boulder, all influencing the final valuation.

Factors such as site access and waste management will all affect the valuation of flats
Factors such as site access and waste management will all affect the valuation

5.Site Factors

The RCA needs to be tailored to each specific site. Access, working area for site welfare facilities, waste management and general storage all influence the rebuild cost.

On sites with restricted access relevant permissions must be obtained from surrounding landowners. These can come with financial implications but can also delay the programme of reinstatement, incurring further costs.

Valuation of Flats – Conclusion

To conclude, a number of factors beyond the basic building fabric must be taken into account to reach the correct reinstatement cost for insurance purposes. An assessment based on element cost approach valuation is as unique as the property being assessed.

An assessment based on average prices often doesn’t offer the detail required to get it right!

If you are involved in the insurance of flats and would like to ensure accurate re-build values are given for building insurance cover, please feel free to call us today on 01455 293510 or contact via email, the BCH office team will be happy to answer your query.

You can also find out more about our Reinstatement Cost Assessments for flats here.

Five factors affecting reinstatement costs of flats in London

Over and above the standard costs, BCH gives further consideration to the following 5 key factors when preparing a Re-instatement Cost Assessment in London or other urban areas.

No two properties are exactly the same. In London this is even more evident. With a wide variety of flats, be they purpose built or conversion, reinstatement costs will inevitably be different.

No two properties are exactly the same. In London this is even more evident. With a wide variety of flats, be they purpose-built or conversion, reinstatement costs will inevitably be different.

Although BCH values blocks of flats all over the UK, we see a high concentration in and around London. This has allowed us to develop an expertise in recognising specific factors that affect the reinstatement cost of an individual property.

The purpose of a Reinstatement Cost Assessment (RCA) is to ensure that in the event of a major insured incident, sufficient funds are available to rebuild the property to the same specification as existing. Over and above the standard labour and materials costs, BCH gives further consideration to the following 5 key factors when preparing an RCA in London or other urban areas.

1. The flats are in a listed or conservation area.

Flats insurance for a listed building
The cost to rebuild a listed building has an array of factors to consider.

An allowance for higher professional fees must be included. Skilled labourers, specialist architects, surveyors and consultants who focus on listed buildings will be required. Approval from a local authority and possibly English Heritage will be required. Key contractors may not be immediately available at the time of a loss.

The time taken to complete the reconstruction of a listed building will be longer due to the co-ordination of various professions, trades and the necessary permissions.

Maintaining the use of traditional materials and forms of construction will be a key factor here and is more expensive.

The site could be of archaeological interest or listed as high potential for new discoveries. Pausing works so that local authorities can carry out research could be a possibility.

Allowances must be made for compliance with current legislation such as Building Regulations.

2. The flats are in a prime central location

It is essential to make allowances for the location of a property. The fact is it costs more to rebuild in London than elsewhere in the country.

Inner London boroughs such as Westminster, Kensington and Chelsea and Camden, attract a premium and the same can be said for outer London boroughs such as Ealing and Richmond Upon Thames.

Currently, there are more billionaires in London than any other city in the world.

Improved confidence in the economy and property market, has seen an influx of overseas investment which has impacted the ‘Prime Central London’ location factor. Development is increasing which is pushing tender prices higher.

The profile of a client has now to be considered. Seeking perfection and flawless finish takes longer to achieve and inevitably contractors price their fees accordingly.

Other factors such as the congestion charge, which has been uplifted twice since 2009, should not be overlooked.

3. Site factors

flats insurance site factor
Restricted access and other site factors are a key consideration.

Restricted access is evident all over urban areas and dramatically increases the costs of working and the necessary application of the Party Wall Act. Many properties have no direct access to the rear façades and access over neighbouring properties would need to be sought.

A site with limited or no space for working or storage of materials during reconstruction may require specialist scaffolding or temporary work lifts over pavements etc. The suspension of parking bays for loading/ unloading and locating of skips can cost £10,000s.

Proximity to railway lines, rivers, canals etc. may require deeper foundations, extra damp proofing, or further consideration to type of materials and construction technique used.

For retaining abutting neighbouring properties, temporary works such as bracing, propping or façade retention may be required. This may also include the retention of neighbouring boundary walls and other external items.

Further consideration must be made for lateral extensions/ flying freeholds into/ over/ under neighbouring properties; making sure that the structure of the building above/ below your property is not forgotten. For example, the policy may only include the 1st, 2nd and 3rd floors of a building, but the ground floor still provides support for the upper floors. Likewise, the roof covers the ground floor as well as the upper floors, so apportionment is necessary.

Certain areas and roads in London apply restrictions on working hours. This will affect scheduling and time on site which would be more costly.

4. Internal and external features

flats insurance architectural features
Consideration should be given to architectural features and included in the reinstatement cost assessment.

Some properties in London, although not listed or located within a Conservation Area, are saturated with internal and external period features. Ornate and decorative features cost more to reconstruct because of the materials and specialist labour required.

Items such as stone, lead, stucco rendering, bespoke cast iron and wrought ironwork are just a few features that are prevalent in London. The difference between building in simple brickwork and stone could be an increase in the cost of as much as 50%.

Some buildings may have a plain façade but reveal an abundance of features internally. Items impacting the RCA significantly are stone cantilevered staircases with ornate wrought iron balustrades, passenger lifts with original iron cages, cornicing and ceiling details and terrazzo, marble and mosaic-tiled floors to name but a few.

Externally, features such as entrance porticos, balconies, window surrounds, pediments, band courses, chimneys and gables are common in London, as the majority of property in the central boroughs are of the Georgian, Victorian and Edwardian eras. Some external features, such as under-pavement stores are often overlooked.

In London, properties historically had one or two levels of basement and, with the boom in the creation of the ‘iceberg’ basements, one has to be prepared for surprises. A feature such requires more excavation, deeper foundations, damp proofing and highly engineered retaining walls; all increasing the RCA.

5. Commercial aspects

Flats insurance with commercial aspect
Many flats have a commercial unit, for example, a shop as part of the block will impact the cost to rebuild.

A large proportion of residential blocks that BCH is instructed to assess include commercial units.

On occasion, the commercial aspect is actually insured on a different policy but consideration still needs to be given as, if for example, it sits beneath your block of flats, allowances will need to be made within the RCA for its structure as it supports the building above.

With commercial aspects present, VAT will need to be addressed. In the case of a block of flats with retail units on the ground floor, the rebuild cost of the flats would be zero-rated (VAT included on professional fees and demolitions only) whilst the shops would be standard rated, as commercial usage does not qualify for zero-rating.

If the property owner is not VAT-registered, the commercial part of the building will be subject to VAT, which will need to be added to the rebuild calculation.

BCH has the experience and knowledge to ask questions of the freeholder and tenant to ensure that the correct allocations for fixtures and fittings are included within the Re-instatement Cost Assessment.

If you have concerns about the insurance valuation for a block of flats please call Barrett Corp & Harrington on 01455 293510.

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