Property Insurance: Rebuild Value and the Condition of Average

Whether its a small allotment style shed or a four story building complex, one of the major points for any group insuring a propety should be What is the rebuild value.

First, what is rebuild value? 

Rebuild value is the cost to completlty rebuild a structure should there be a Total Loss. For example if a building were to catch fire and be completly burnt to the groud, providing the Property was insured the insurer would pay for the reconstruction of the building and leave the insured in a postion they were prior to the fire.

Is the rebuild value not the same as the Market Value?

One common mistake made when orgnaisations look to insurer their property is that they use the current market value rather than the actual rebuild value. Through doing so, they are insuring the building for more often more than not a limit that exceeds what is required leading to higher premiums.

Now that we have touched over the rebuild value, one key point to keep is mind is underinsurance which can lead to the Average Condition being applied should you make a claim

What is the Condition of Average?

The Condition of Average can be applied when a claim under the property or material damage section of a policy. This condition states that should you be underinsured you shall only receive a claim payment that reflects just what percetnage of the true value was insured. This sounds complicated, but in essense its quite straightforward. For example, if a builidng with a rebuild value of £100,000 was burnt down and the owner only insured the building for £80,000, should there be a claim for £1000 due to some damage to the building the insurers would only pay £800 as they insured only 80% of the true value.

How can i ensure i have insured a building for the correct amount?

there are vaious ways in which you can obtain a true rebuild value of a building you own, one of the main options being a surveyer who would inspect the building to provdie an accurate figure for your organsiation to use.

Does Ladbrook offer this service?

At Ladbrook, we now have access to provide an online survey through ReBuild Cost Assessment, Through doing so, this will guarntee they are insured at a correct indemnity limit and will not have to fear a reduced payout in the event of a claim or a premium greater than what they truly should be paying. If you are interested in this and would like to find furhter information, please do not hesitate to contact us as we will be more than glad to help ensure you are covered for the true value of your property. Through accessing this service, you shall receive a comprehensive Rebuild Cost Assessment report guiding you on how much you should insure your buildings for.