No – this is not about avoiding peeping toms, it is making sure that your home, your most valuable asset, is properly protected and fully insured.

Should anything happen, such as a fire or structural damage, are you certain that your buildings insurance would fully cover any loss?

In these hard economic times, it may be tempting to cut corners and either leave the amount insured at last year’s level or even reduce it to save a few pounds in premium payments. This is a false economy, and would have a serious impact on any payout in the event of a claim.

Just because interest rates are at an all-time low, and property prices have fallen dramatically, this does not mean that the cost of replacing your home in the event of a catastrophe has gone down. On the contrary, material and labour costs continue to rise.

Most buildings insurance policies include provision for an annual indexation increase and, whilst this provides some protection against the impact of cost inflation, it does not provide an accurate guide to the true cost of rebuilding your home. It is therefore strongly recommended that an up-to-date reinstatement cost revaluation is carried out by a Chartered Valuation Surveyor every 5 years. Such a revaluation will also take into account any changes and improvements you may have made to the property since the level of cover was first
set.

Many people wrongly assume that, if the cost of repairing their property under a claim is less than the sum insured, it will automatically be paid. This is not true: payouts are based on the level of cover being sufficient to reinstate the whole property.

For example, take someone who owns a flat which is currently worth £150,000, but which has a building reinstatement value of £100,000. They purchased the property a few years ago for £250,000 but have never increased their insurance cover from that time, which was only£80,000.

Sadly they suffer a fire, which causes damage costing £40,000 to repair. Had the property been insured for the full £100,000, this would have been paid out in full, but because the cover is only 80% of that figure, only £32,000 was recovered from the insurance company, leaving the owner to find the rest.

Don’t let this happen to you. Relatively small increases in your premium
to ensure you are fully covered give a huge benefit in peace of mind.

David Dalby, FRICS, Residential Director, Royal Institution of Chartered Surveyors