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Guidance Notes
1) Buildings:
The Steps to Take
The sum insured must be adequate to fully rebuild the property without deduction for wear tear or depreciation. This sum should also include provision for:
- Professional fees (such as architects & surveyors) incurred in reconstruction.
- The removal of debris from the site and surrounding area, plus demolition, shoring/propping up costs.
- Any extra costs of reinstatement to comply with Public Authority requirements or building regulations.
- VAT an allowance must be made for any "non recoverable" VAT on rebuilding costs. - Any landlords contents should be stated separately.
If you are in any doubt about the sums insured required we strongly recommend a professional valuation for insurance purposes is carried out on your property.
Provision for fluctuation of costs.
It is of course difficult to accurately establish the rebuilding cost of a property and also take into account any fluctuation in rebuilding fees such as the cost of building materials, professional services and labour not only for policy year but also for any subsequent rebuilding period. For this reason we recommend to all our clients, cover is arranged on a "Day One Inflation Protection" basis. This works as follows:
a) At inception of cover the "Declared Value" is notified to insurers, this is the cost of rebuilding the property in accordance with the details stated above, without the need to cater for inflation or other fluctuation costs..
b) The inflation provision (this is a pre-selected percentage uplift, we recommend a minimum of 15%, but in most cases will quote with a 25% uplift) is immediately added to the "Declared Value" with effect from "day one" of cover. It is this latter figure that becomes the sum insured. Provided the declared value has been correctly calculated at inception the uplift chosen should adequately cater for rebuilding fluctuation costs and avoid the effects of underinsurance. Further details specified to your own property will be provided with the quotation.
Terms Of Business
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Master Cover Insurance Ltd. are authorised and regulated by the Financial Services Authority to conduct the sales and administration of General Insurance.
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