The condition of your existing structure will have a bearing on how a claim under this type of insurance is settled. What factors do you have to consider if your building is in poor condition?
The underwriter’s view of your project is also affected by the condition of the existing structure. The majority of the projects we see are for buildings which are structurally sound and are either not to the taste of the incoming owner or simply require updating.
In certain circumstances, such as barn conversions or where perhaps a property has been unoccupied for a long period of time, the structural integrity and the building’s ability to resist water may be compromised.
The condition of your existing structure will have a bearing on how a claim under this type of insurance is settled.
This usually means that the property has been without maintenance for some time and that it represents a higher risk to insurers than would normally be the case. It is likely that the works proposed for the property will deal with all of these issues.
However, when arriving at a rebuild valuation, underwriters will take into account that the property is not suitable for reinstatement insurance. Reinstatement insurance is only available for properties in a reasonable state of repair and, as the word suggests, can be put back in the condition they were prior to the loss.
For properties that are not in good condition, an indemnity settlement will usually be made which reflects an element of wear and tear on the property concerned and acknowledges that it is impossible and undesirable to put the property back to its pre-loss condition.
If the property that you are considering renovating is not in a reasonable condition we strongly advise that you obtain a professional indemnity valuation which accurately describes its condition and estimates an indemnity settlement figure.
See what can happen to an existing structure during a renovation project in our example claims section.