Why your listed property might be underinsured

By Andy Duarte Insurance Advisor

A historic timber-framed house with a wooden door and white windows stands between brick and plaster buildings on a street.

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Owning a listed property comes with unique responsibilities and challenges, especially when it comes to insurance. We speak to many listed property owners and a common topic we come across is underinsurance. When insuring a listed property setting the correct buildings sum insured is crucial and here’s why.

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The importance of having correct rebuild costs.

The buildings sum insured is the amount it would cost to rebuild your home from scratch. This includes all fixtures and fittings, patios, driveways and outbuildings.

Having the correct buildings sum insured for your listed property is important for the following reasons:

Shortfall in the event of a claim. If your listed property is insured for £600,000, but the actual cost to rebuild it is £1,000,000, the insurer may reduce the claim by 40%. This means you could face a shortfall of £400,000 in the event of a major incident. This clause also applies to any claim, so a £10,000 claim might only result in a £6,000 payout.
Claim disputes. Insurers may refuse to pay a claim completely if they deem that you have deliberately or recklessly underinsured your listed property.
Rebuild delays. If a claim is disputed it may delay the rebuild. It’s a homeowner’s responsibility to set the buildings sum insured. . It’s important to remember that there is no direct correlation between the market value of your home and the rebuild costs, especially when your home is listed.

Factors which may affect your listed properties rebuild cost

Rebuild costs for listed properties can be significantly higher due to the following factors:

Specialist Materials and Techniques. Grade I, Grade II and Grade 2* properties often require specific materials and traditional building techniques, which can be more expensive and harder to source.
Professional Fees. The involvement of conservation officers, architects, and other specialists can increase costs.
Planning. Consideration must be given to the increased length of time taken at the planning stage to ensure the repair/rebuild meets with planning authority requirements.
Regulatory Compliance. Ensuring compliance with heritage and conservation regulations can add to the complexity and cost of rebuilding.

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How the economic climate impacts rebuild costs

Rebuild costs increased during Covid and continued to rise because of Brexit and the ongoing war in Ukraine. Whilst rebuild rates have started to stabilise they are still circa fifty per cent higher than they were three years ago.

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Recommendations for listed property owners

To ensure your listed property is adequately insured we recommend that you take the following steps:

Regularly review your sums insured. Make sure your buildings sum insured reflects the true cost of rebuilding your property – taking into consideration the unique requirements of listed buildings. Remember to factor in any upgrades or renovations. If you fail to increase your buildings sum upon completion of works you may find yourself underinsured.
Seek professional advice. Engage with specialists who understand the intricacies of listed properties. Companies such as BCH or RCA can survey your property and advise you of the rebuild cost. It’s important to note that this wouldn’t be a valuation but a reinstatement cost. We have relationships with BCH and RCA and would be happy to talk you through the process.
Consider additional cover: Consider policies that offer extended alternative accommodation cover. Rebuilding a listed property in the event of a total loss may take longer than rebuilding a home of standard construction.

By taking these steps, you can protect your Grade I or Grade II property and avoid the financial pitfalls of underinsurance.

How Abode can help with your Listed Property Insurance

At Abode, we specialise in providing tailored insurance solutions for listed property owners. With nearly 20 years of experience, we understand the unique needs of unique and historic homes. Our team of experts take the time to assess the specific requirements of your listed home, ensuring you receive a customised policy that offers comprehensive protection.

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Listed properties hold an important place in our national heritage. As a result, there are certain laws around the changes you can make to your home both inside and out, to help preserve the features and character that make it individual. Insuring your listed home is therefore more complex, but it is also absolutely vital.

Find out more about listed home insurance