Landlords of all properties are being advised to make sure the reinstatement value of their asset is right up-to-date or risk losing out should it end up being destroyed.
A catastrophic fire that ripped through a student apartment block at the end of last year is a stark reminder to all landlords on the importance to make sure their insurance premiums truly reflect, not only the cost of the building’s market value but, more importantly the full reinstatement cost should it need to be demolished and rebuilt including all associated fees.
Relying on an old reinstatement value and adjusting it according to inflation, is a risky course of action to take - and could result in inaccuracies between the value of insurance cover taken out and actual cost of rebuilding.
It’s vitally important landlords constantly update the value of their property. As a landlord, if you haven’t kept your reinstatement value up-to-date then the difference between the value of the insurance cover requested and what it will cost to rebuild your property might come as a shock.
Construction costs have been rising over the last year or so and are expected to continue to rise. The uplift in costs may not have been taken into account when setting reinstatement values.
Conversely, if the property is overvalued then landlords and their tenants will be paying over the odds for their insurance and is another reason to have it valued regularly.
The warning from Ian brings into sharp focus the need to have a regular assessment. Our advice would be to undertake a full assessment of insurance requirements every three to five years or every time you undertake relevant alterations to your building and this should be supported by an annual online update.
The student apartment fire also acts as a reminder for the need for someone to be responsible for fire safety such as the landlord or occupier of the property. It is then their responsibility to implement, review and update the fire risk assessment under the Fire Safety Order.
If the property is a shared premise there is a requirement to have more than one person responsible for coordinating fire risk assessments. Where there is a common area in a multi occupied office or residential building the responsible person is the landlord, freeholder or managing agent. It is important that people are aware of their responsibilities under the Fire Safety Order.
Routine and Periodic inspection, servicing and maintenance of the fire alarm systems and evacuation procedures should also be undertaken. The alarm system installed should meet the users’ specific requirements for the building and Insurers should also be consulted to ensure the systems installed meet the insurance requirements.
“It’s vital landlords protect their assets and ensure they have thoroughly understood all the terms of their policies to ensure they have not been invalidated, which could prevent insurers paying out the full value.”