Introduction Underinsurance is a perennial problem for the insurance industry in general, particularly so in the case of building insurance. Costs do not remain constant over time, vary according to building types and materials, and are also subject to local variations in building costs relating to factors such as labour costs, remoteness or inconvenience. Where buildings are of fine quality or over a hundred years old, and especially if they are listed, the variables become even greater. We have produced this guide to valuing buildings as an aid for the use of our underwriters. It ideally relies on knowing the total external floor area of the building (the sum of all floors) and there are various escalators to cover the variations mentioned above as well indicators of potential additional costs. This guide is designed give our underwriters some general indication of the probable range of rebuilding costs in cases where there is no genuine source for the sums insured or where there are reasons to doubt them. It must be emphasised that there can be no substitute for a professional evaluation. VAT Hiscox underwrites on the basis of declared total rebuild costs which include VAT but do not include professional fees, demolitions and the provision of alternative accommodation. We understand that technically in the case of a complete rebuild the build costs are not subject to VAT, but in reality the vast majority of losses are a proportion of this sum, and as such are liable to VAT. We allow up to 25% for professional fees over and above the sum insured. Listed buildings In general for listed buildings there is a requirement to replace decorative features and materials on a like for like basis; this may also apply to buildings in a Conservation Area (exterior only). This may have a significant impact on costs. We have suggested an increase in costs of at least 10% if a building is listed. Where a building is listed Grade I, II*, or A (in Scotland and Northern Ireland) a professional assessment must be obtained. Hiscox does not provide extended cover for Grade I, II* or Grade A buildings. Important notice to brokers Copies of this guide will be also made available to brokers for their information, to assist them in the preparation of placing information and to give a better understanding of the underwriting issues involved. It is not, however, intended as a valuation guide for broker or policyholder use and neither should rely on this document in determining their insurance needs in any specific case. It is for the broker and their client to determine and advise underwriters of the level of insurance cover required and Hiscox does not undertake to brokers or policyholders that the values and costings given in this guide will be appropriate. Hiscox does not accept responsibility to brokers or policyholders if rebuilding costs in a specific case vary from those suggested by the guide and in referring to this guide brokers and policyholders agree that Hiscox will not have any liability to them in respect of the contents of this document. 6916 06/11 1 of 7
Suggested standard rates Note multipliers at the end of this report should be applied where appropriate Larger country house Mass design house Suggested rebuild: 2,000 to 4,000 per m² Urban terraced house with three storeys plus Suggested rebuild: 1,200 to 1,500 per m² Cottage/village house Suggested rebuild: 1,300 to 2,500 per m² Suggested rebuild: 2,000 to 5,000 per m² Individual executive house Suburban villa/semi-detached house Suggested rebuild: 1,500 to 2,500 per m² Suggested rebuild: 1,500 to 2,500 per m² 6916 06/11 2 of 7
Please note, as already indicated, that professional valuations should be obtained for the following types of risk: Listed properties or properties located in a conservation area Properties with finely carved stone or decorative brick construction Properties of timer framed construction Properties with elaborate pargetting (decorative external plasterwork) Properties with thatched roofs Properties with exceptionally fine quality interiors Properties of various build dates Very large properties Converting square feet to square metres To convert from square feet into square metres divide the measured area by 10.76 Note: external figures are used to calculate costs. If available figures are internal (such as from an estate agent s particulars) multiply by 10% to give an approximate sum. Area not known Allow between 50 and 100m² for each bedroom depending on the scale of the property (sliding scale from three to ten bedrooms) Attics and secondary floors It is standard practice to rate attic floors at approximately 70% of the cost of the main floors; similarly different rates can be applied throughout a building where appropriate. Multipliers for particular features These are very general and intended as a guideline only. They give an indication of where variables may lie and should be used with discretion. Poor access to the property or an isolated or remote situation will also have a significant impact on costs Add 5% to 10% if listed OR Add 10% to 20% if pre 1850 Add 10% to 50% for very high levels of finish Add 10% if ceiling heights over 3m Generally the larger the property the less weight should be given to these variations. In all instances discretion should be used. Regional variations To reflect the regional impact on rebuilding costs, the following weightings can be considered: Region Weighting London 1.20 South East 1.10 N.West, S.West, Eastern and Scotland 1.00 Midland, Yorks, N. East & Wales 0.95 Northern Ireland 0.75 Obviously there will be variations within these regions, especially for very urban or very rural properties. 6916 06/11 3 of 7
Additional features The building rates do not allow for special features and therefore particular consideration should be given for the following common features, and any other features of note. In general the Insured will often have details of expenditure on items such as kitchens, conservatories, swimming pools, decoration, lighting or hi-fi systems and simple questioning can provide accurate sums for this type of expenditure (see standard questionnaire). Additional external features may include (approximate guidelines) Conservatory/greenhouse ask client for sums if recently built or apply rate of between 1,000 (standard upvc double glazed) to 4,000 (top quality bespoke timber) per m² Be aware of convenience of access - generally total will be between 20,000 and 100,000 Septic tank and associated drainage - 10,000 to 25,000 Boundary walls and fencing - 10,000 upwards (insuring on a first loss basis may be more appropriate) Driveway/patio/terrace/footpaths - 5,000 to 50,000 Swimming pool - 30,000 to 60,000 (also allow for electric covers) Tennis court - 20,000 to 40,000 Architectural features (colonnade/clock towers/chimneys) CCTV and security hardware Patio or house lighting/audio etc. Additional internal features may include Kitchens could be as much as 250,000 for bespoke one Bathrooms when of special quality Dressing rooms, studies, etc., when fitted with bespoke furnishings Integral hi-fi, vacuum system, air conditioning etc. Intruder alarm systems, CCTV, etc Chimneypieces or fireplaces - marble, carved wood, wood and gesso - decorative tile work Decoration - hand printed wallpapers can cost upwards of 500 a roll - fabric linings to walls - decorative paint finishes, murals, etc. - floor materials, such as stone, marble, oak, etc. - panelling - plasterwork these will clearly require professional evaluation if historic Garages Standard rates for garages start at approximately 10,000 for a single and 15,000 for a double and rise according to the nature of the construction. If attached to the house and built in a similar manner they should be rated accordingly. If integral to the house they should just be included in the calculated area of the house. Outbuildings Outbuildings are rarely finished to the same standard as the main building and therefore an appropriate figure for the rebuilding cost per square metre should be allowed. There are many variations of outbuildings in terms of design, structure, usage and materials and these should all be considered before applying a rate. Suggested figures for outbuildings would range from 300 per square metre to 1,000 per square metre. Also note condition if very poor underwriters may wish to restrict or refuse cover. 6916 06/11 4 of 7
Specific examples Hertfordshire 600m² @ 3,500 Insured refurbished to very high standard Recommended 2,100,000 London 320m² @ 2,000 Recommended 640,000 + 20K for patios etc Bedfordshire 366m² @ 1,500 Recommended 550,000 London 6 bed - note 100,000 kitchen 457m² @ 3000 Recommended 1,370,000 Yorkshire 420m² @ 1,750 Recommended 735,000 6916 06/11 5 of 7
Leicestershire 415m² @ 2,200 Recommended 915,000 Derbyshire 416m² @ 2,500 Recommended 1,040,000 Middlesex 446m² @ 2,200 (high spec refurbishment) Recommended 980,000 Essex 6 beds 330m² @ 1,750 Recommended 580,000 Surrey 7 beds 430m² @ 2,600 Recommended 1,120,000 Wiltshire 4 beds 190m² @ 2,300 attic 30sq m at 1,600 Conservatory 20,000 Recommended 505,000 6916 06/11 6 of 7
Sussex 353m² @ 2,100 Recommended 740,000 Herefordshire 1335m² @ 2,400 Recommended 3,200,000 Lincolnshire 502m² @ 2,700 (original 18 th century) and 2,000 (Edwardian extension) Recommended 1,250,000 Hampshire 2,400m² @ 5,000 Recommended 12million Sussex 10 beds 1255m² @ 3,000 Recommended 3,800,000 6916 06/11 7 of 7