How to ensure your commercial property insurance is accurate

Underinsurance can be a big problem for commercial property owners. It happens when the amount insured for a property is too low to cover the full cost of rebuilding after damage. This can leave property owners with unexpected costs or denied claims. If you need commercial property owners' insurance, the risk of underinsurance can be high if rebuilding costs are not calculated correctly.

In this blog, we’ll look at the dangers of underinsurance and how it affects your commercial premises insurance and other property policies. We’ll show why it’s so important to get accurate rebuild cost assessments to protect your investment. You’ll also learn about insurance solutions designed for different types of properties. Plus, we’ll explain how rebuild costs can affect your premiums and share simple tips to ensure your policy gives you the right level of cover.

Whether insuring an empty property or buying commercial property building insurance in the UK, getting rebuild costs right is essential. This will help you avoid underinsurance and make sure you’re properly protected. Let’s get started and find out how to keep your assets safe with the right insurance.

The risks of underinsurance: what you should know

Underinsurance happens when the amount your property is insured for isn’t enough to pay for rebuilding it after damage. If your property is underinsured, your insurer might only pay part of the costs. You would then have to pay the rest yourself. In some cases, insurers may refuse to pay at all. 

Many policies also include something called the "average clause." This means your payout will be in line with your level of underinsurance percentage. This can lead to significant strain for landlords, particularly if the property can’t be lived in or needs major repairs.

Explore our blog for an in-depth look at the average clause: What is the Average Clause in Insurance?

Our latest infographic reveals that 71% of commercial properties are underinsured, a significant financial risk for property owners. View the full breakdown here: Annual Infographic. This puts many property owners at risk. Underinsurance often happens because valuations are out of date, rebuild cost calculators are wrong, or rising building costs are not taken into account. When building costs go up, the gap between what is insured and what it really costs to rebuild gets wider. 

Landlords and property investors need to make sure they have the right cover. To avoid underinsurance, it’s important to know the real cost of rebuilding your property. A rebuild cost assessment can help. This gives you clear and accurate information so you can protect your property and your finances.

Why rebuild costs are important

Rebuild costs are the amount of money needed to rebuild your property if it’s damaged by a fire, flood, or other disaster. These costs include construction, materials, labour, demolition, and debris removal. Rebuild costs are not the same as market value, which is the price your property could sell for. If you only rely on market value, you could end up underinsured. Learn more in our blog: Understanding rebuild cost vs market value.

How to work out rebuild costs

1. The wrong way: using rebuild cost calculators

Online calculators are a popular way to get an estimate. They are fast and simple to use. However, they might miss important details, like special features, local construction costs, or unique properties like listed buildings. Relying only on these tools could mean your property is underinsured.

2. The right way: getting a professional assessment

For a more accurate figure, consider a professional rebuild cost assessment. Regulated by RICS, at RebuildCostASSESSMENT.com, we provide an affordable desktop service led by Chartered Surveyors. Instead of visiting your property, we use trusted public data to give you a reliable estimate. This option is simple, accurate, and less expensive than traditional surveys.

Find out more about professional assessments in our blog: Reinstatement cost assessment: UK property owners guide.

Why accurate rebuild valuations matter

Getting an accurate rebuild valuation has many benefits:

• Avoid underinsurance: Knowing your property’s true rebuild cost ensures you have enough cover. This protects you from paying unexpected costs if you need to make a claim.

• Save on premiums: An accurate valuation ensures you are not paying for more insurance than you need.

• Stay compliant: For landlords, having the right valuation helps you meet UK insurance laws and protects your property and tenants.

  
  

Our desktop assessments can show if your property is under, over, or accurately insured. If this service is not right for your property, we will recommend other suitable options. Our desktop assessments are trusted by insurers. They give you clear information and confidence that your property is fully protected.

Insurance solutions for different commercial property types

Every property is different, and so are its insurance needs. Vacant buildings, mixed-use properties, and listed buildings face specific risks that standard insurance may not cover. Tailored insurance provides the protection these properties require.

Vacant and unoccupied properties

When a building is empty, it’s more likely to face problems like vandalism, theft, or damage from the weather. Regular commercial property insurance may not include these risks. This is why commercial property insurance for vacant building situations is vital. It provides cover for the risks that come with leaving a property empty.

There are still some limits, such as no cover for theft without forced entry or general wear and tear. You should always check your policy details to understand what's included.

Mixed-use and listed buildings

Mixed-use properties, which combine residential and commercial spaces, need special insurance. Listed buildings, which have historic value, also need tailored policies. These buildings often have unique materials or designs that make repairs more expensive. Special insurance, like listed building insurance, ensures these costs are covered.

Commercial insurance for apartment buildings is also important. It protects properties that combine homes and businesses.

How we help

Our rebuild cost assessments give you the exact rebuild cost you need to make sure your property is fully protected. With the right cover and expert advice, you can confidently protect your investment.

How rebuild costs affect your insurance premiums

Rebuild costs are an important factor in your insurance premiums. Higher rebuild costs usually mean higher premiums, but this doesn’t always mean better protection. If rebuild costs are overestimated, you may end up overinsured, paying more in premiums than you need to. On the other hand, underestimating rebuild costs can leave you underinsured and at risk of significant financial losses if you need to make a claim.

Other factors can also affect your premiums, like where your property is, its security features, and the type of property you own. For example, properties in flood zones often have higher premiums, while adding security measures like CCTV or alarms can reduce costs. Special property types, such as listed buildings or mixed-use properties, often need tailored valuations. 

To manage premiums while keeping proper cover, you can take simple steps:

1. Add security features to reduce risks.

2. Keep vacant properties well maintained.

3. Make sure rebuild valuations are up to date.

   
   

Accurate rebuild valuations help keep premiums fair while ensuring your property is fully protected. They also help you comply with UK insurance laws, giving you extra peace of mind.

This is why getting an accurate rebuild cost assessment is so important. It helps your insurance match the real cost of rebuilding, so you avoid both underinsurance and overinsurance.

Rebuild cost assessments should be reviewed regularly to make sure they reflect current construction costs. Learn more about how long assessments stay valid here: How long will the rebuild cost assessment be valid for?

Make sure your commercial property insurance protects you

Protecting your property starts with knowing the true rebuild cost. If you own a vacant building, a mixed-use property, or a listed structure, your insurance needs to cover the full cost of rebuilding. This helps you avoid financial complications if something goes wrong.

At RebuildCostASSESSMENT.com, we offer rebuild cost assessments you can trust. These assessments help you get the right amount of cover without overpaying on premiums. With accurate insurance, you can protect your property and feel confident knowing you are fully covered.

Get your rebuild cost assessment today

Want more? We’ve answered some common questions below to help you understand commercial property insurance better.

Important disclaimer: The information provided here is for general informational purposes only and is not intended as professional advice. While we strive to ensure all information is accurate and up-to-date, the content may not reflect the most current legal or regulatory developments, standards, or practices. No representations or warranties are made (express or implied) about the accuracy of the information provided, and reliance on this information is strictly at your own risk.

We do not offer financial advice and nothing within this content should be construed as such. We recommend consulting with a qualified professional who can provide tailored advice based on your individual circumstances before making any decisions related to insurance.

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