Insurance Rebuild Cost

oneburge

Interested in opinions as lender not being particularly helpful...

I'll try and keep it short;
- buying a listed building
- had full structural survey done by a guy who came with a recommendation as a 'specialist' in listed buildings
- survey came back with a rebuild cost of £298k
- Lender sent me a copy of their Mortgage Valuation along with the Mortgage offer - they estimated rebuild cost at £468k

I have asked the lender what I am mandated to do with regards the insurance. I recognise that I have to have buildings insurance for the lifetime of the mortgage, but do I HAVE to use their rebuild cost? They said they would refer it to the underwriters, who in turn referred it to their surveyors who in turn (surprise surprise) said 'use our figure'. But when I challenged them they admitted they weren't sure whether I had to follow that advice

I have asked them to refer it again to the underwriters with a more specific question, but interested to know what everyone else thinks?

propertyman

The lender has provided a sum for rebuilding purposes, which you should then use to insure.

The underwriters will be unable to answer. If you do not insure for the figure set by the lenders valuer, you are at risk of being in breach of the terms of your mortgage and by under insuring being unable to replace the building as a home or to the value that you owe on the mortgage.

Listed buildings is a broad church some require specialist knowledge about the materials and the requirements to rebuild, as well as the often hard to find trades and high costs.

Your resolution is to ask your surveyor to review the sum insured rebuilding costs and the declared value to ensure it's accuracy and that they are comparable.

I might value a building at say £300K to rebuild.

But when I have added the site clearance, local authority consents, professional fees , and VAT*, then inflation over the period of insurance and the time it takes to rebuild,

the actual figure could be nearer £450/500K.

* Check the VAT status on Listed buildings though.

teneighty

I would be inclined to go with the listed building specialist, but give him a call just to double check he is happy with his figure...it could just be a typo. I doubt whether many of the mortgage valuers working for the big lenders have the specialist skills to calculate rebuilding costs of listed buildings. They probably just took the figures of the standard tables and doubled it to be sure.

kingstreet

For the avoidance of doubt, I'd use a blanket-type policy with unlimited buildings sum insured.

The premium is normally linked to the number of bedrooms for such cover.

G_M

Far more important than complying with the motgage requirements, is having proper insurance.

If the place burns down, being under-insured is not where you want to be.

Getting a blanket policy is a good solution. Many of them provide either unlimited, or up to £500K or £1m.

oneburge

Fabulous responses - thank you to you all.

I hadn't realised you could get 'blanket' insurance, so will certainly wander down that road.

:T