In 2012, Building Cost Information Service (BCIS) conducted research into under-insurance in commercial property. Results confirm that despite regular reminders, as many as 80% of commercial buildings are still under-insured.
Coinciding with the launch of BCIS's commercial property rebuilding calculator, this was a stark reminder that if shortfalls in reinstatement claims are to be avoided, regular reassessment of property value is vital.
Morag Keohane, Caxtons' insurance manager, says: "Unfortunately too many property owners rely on the building value to be index linked and allow the value to go unchecked year on year.
"We also see many purchasers relying on the value the vendor insured the property for without confirming if this is correct, or adopting the asset value as the reinstatement cost.
"This means that insurance companies will not have accurate details regarding the value of the building and any claims may therefore be subject to average if a property is under insured.
"Carrying out regular valuations is essential to ensure property owners are not left out-of-pocket should they need to make a claim in respect of their property."
The Royal Institution of Chartered Surveyors (RICS) recommends that a reinstatement cost assessment (RCA) should be carried out at a minimum of every three to five years. Property owners' insurance policies make it a policy condition that regular valuations are carried out by a RICS qualified surveyor, normally every three years, although this depends on the insurer.
In a recent on-line article published by RICS they said: "The Insurance Act, which came into force in August 2016, contains important changes, which those in the
There are two types of policy cover. A building can be insured on a 'reinstatement basis' where the amount of indemnification is determined by the cost of repair or reconstruction at the time of the loss rather than at the start of the insurance period. This means the sum insured at the start of the insurance year must include an adequate allowance for inflation both during the insurance period and during the rebuilding period, which may be longer.
The alternative is 'day one reinstatement basis' method, where the actual rebuilding cost is set as at the first day of the insurance period. Inflation is included automatically in the policy. This represents good value for money as the insurer may only charge, for example, 5% of the full rate for an inflation provision of 30%.
Caxtons Commercial Limited is an Appointed Representative of Morrison Edwards Insurance Services Limited which is authorised and regulated by the Financial Conduct Authority.
Dr Thérèse Coffey MP, Parliamentary Under Secretary of State for the Environment and Rural Life Opportunities, recently met with the British Property Federation (BPF) at which the topic of discussion was owners not included in the property Flood Re scheme.
Flood Re, which was developed by the insurance industry and government, came into effect in 2016. It provided solutions for residential property owners at risk in high flood prone areas but excluded cover on certain properties types such as blocks of flats, buy-to-let, commercial property, and residential property built after January 2009. This impacted leaseholders, landlords, many SMEs and residential owners in newer properties who found themselves facing two options - prohibitively costly property insurance or no insurance at all.
Some insurers chose not to participate in the scheme, but many of the everyday names opted-in to the scheme thereby providing a range of affordable policies for residential owners in need of flood cover.
One year on, the British Insurance Broking Association (BIBA) has unveiled an insurance policy specifically for SME owners of commercial, leasehold and buy-to-let property in flood risk areas, which will provide them with more affordable and adaptable tailored cover.
Due to the use of clever mapping software, each property can be successfully located, assessed for individual risk of flooding and the premium would be set accordingly. Policyholders can then decide on the level of 'excess' they wish to pay in the event of any claim, thus making the scheme particularly adaptable and affordable.
David Gurton, Director and Head of Insurance at Caxtons said: "We are delighted to be able to offer this new surety of affordable buildings insurance to property owners in flood risk areas who wish to insure their commercial premises, blocks of apartments or buy-to-let properties through the Pi-Property scheme that we can now provide.
"At the time Flood-Re was launched, we acknowledged the injustice where certain categories of property owners, who because they owned in areas of higher flood risk such as Yalding (particularly badly affected by floods in early 2000) were unable to afford suitable building insurance cover. Now that issue has been addressed and we welcome this restorative step forward.'
Once again, Caxtons has been awarded 'EGi Deals Winner Kent' - the prestigious property industry award for commercial property agencies. Winning the 2017 award for the sixth time in seven years is the result of Caxtons outperforming all other commercial property agencies across Kent.
This award is judged on the number of successfully completed commercial property sales and lettings 'deals' secured in the preceding twelve-months.
James Roberts, from Caxtons in Canterbury said, "We are delighted that again we have secured the award, which only reinforces our standing as one of the first-choice commercial property agencies in Kent and beyond.
"The commercial market is undergoing change, not least because of uncertainty caused by the Brexit vote. However, the market is still moving apace and commercial property is still a good longer-term investment. As businesses grow their property requirements change, so there will always be a need for commercial premises. Having said that, there is still a dearth of certain types of property which can prove difficult, but thankfully, deals are still being successfully achieved."
In what has been, at times, a challenging year in the commercial property sector, Caxtons again improved on the level of activity it was able to achieve in previous years.
Caxtons' Commercial Agency team is as busy as ever and keen to continue selling and letting more commercial property than any other agent in Kent.
Estates Gazette is the well respected, leading national property publication and its EGi website attracts more people seeking business premises than any of its competitors.