New buildings insurance, posible misguidance by broker

[Lady_K]

Daughter has just moved into her new house with her boyfriend, it is a £130,000 3 bed semi with ground floor extension full length of house at rear. They went to a local broker who has advised them to cover the buildings for £150,000 and contents for £30,000, they told her it needed to be that much to allow cover for next door as it is a semi if a fire started on her side and affected the nieghbours it would be her responsibility.

 

I'm not too convinced about this, it worries me because I use exactly the same broker and exactly the same insurance provider and have a house approx same value (going by houses in my street) 3 bed semi. The only difference is I don't have an extension and I have a bigger garden. My buildings cover is £97,000 and contents £21,000 so obviously they didn't allow any cover for next doors with me. Mine cost me £150 less than they have paid.

 

Does it seem they might have been misguided and could be a bit over insured costing them more?

 

They paid it yesterday, how long is cooling off period and if they have been misguided will they have to pay anything to get out of it or lower the cover with same provider? Or could the broker be liable?

[unclebulgaria67]

A broker should not be advising on rebuilding costs. There is no requirement to overinsure to cover any liability to a neighbour. In any event if there was any proved liability, this would be covered by the liability section of cover and not via the Building sum Insured.

 

Suggest that they contact the broker and adjust the cover if they want to do so. They should ask to speak to the branch manager and mention the previous conversation, so the manager can use this as a training issue.

 

In regard to the actual rebuilding cost. I would say £97k is probably a bit low for your house and £150k may not be right for your daughters house. You can check the rebuilding cost for most properties using the following guide. http://calculator.bcis.co.uk/

[Lady_K]

Thankyou,

 

The valuation report gives a valuation on £129,995 and a rebuild cost of 25k

 

The broker tried to give the impression still that there is a need to cover next doors in a very confusing misleading way to me when I rang. But when I said I always thought that it was included in buildings insurance if there was any problem with adjacent properties and he then said yes they would be covered up to 2 million pounds so I don't know why they go on about having to allow for next doors in the first place.

 

He did say if the rebuild costs in the valuation report are lower and they want to change it there will be no charge and a refund for the overpaid premium. He did state though that whatever it says on the valuation report to add an extra 10k to cover for plans to be drawn up and site clearance etc but is it necessary to add this extra 10k or would those costs have been taken into account in the valuation report rebuild cost?

 

I will be looking into my own cover when it comes around again in April, I did query the cover they advised me of last year but was assured it would be enough but I do feel mine is a little on the low side

[unclebulgaria67]

The valuations given normally include land clearance and other costs associated with rebuilding on the same site. The purpose of them adding the rebuilding cost on the reports is to inform people, so that they can use for Insurance purposes if they wish to. But it is not bad advice to Insure for a little more, as many people do not allow for improvements they carry out to properties over a period of time and it allow a bit of breathing room if Insurers make an assessment following a claim. If you are found to be underinsured, Insurers can reduce a claim settlement.

 

In the last post I think you meant the rebuilt cost was £125k and not £25k. So if the property was Insured for say £135k, at £150k it is not currently excessively overinsured. I doubt the extra premium involved will be that much.

 

Personally I opt for the policies that provide blanket cover up to £1million or unlimited, so that I don't have to bother keeping in touch with what the rebuilding cost would be. In theory if you set the Buiilding sum Insured at the correct level and the policy is index linked, as long as you update for improvements, the sum insured should be correct.

[Household Claims Handler]

Havent read the other posts but your daughters insurance is there to cover her property not the neighbours. You can't insure something that you have no financial intrest in.