What you need to know about Buildings Insurance
Buildings Declared Value v Buildings Sum Insured
Buildings Declared Value (BDV) and Buildings Sum Insured (BSI) are often confused and it’s important to understand the difference. Should Life Property Management provide a communal buildings insurance policy for your development, your policy shows a Buildings Declared Value and a Buildings Sum Insured. This allows for inflationary factors which can happen between the day your policy starts and the date of any potential claim and the time taken for the repairs or rebuilding work to be completed.
Buildings Declared Value
The BDV is the value of the property, the bricks and mortar, everything that’s fixed to the property, including fitted kitchens and bathrooms, on the day the policy starts. It doesn’t take into consideration the value of the land or the desirability of the area - it’s simply the rebuild cost. The BDV should represent the total cost of re-building including damage to outbuildings, car parks, professional fees and costs to comply with local and EU legislation and should also include an allowance for debris removal costs.
Buildings Sum Insured
The BSI figure is always higher than the BDV, to cover you against the rise in building materials or inflation over the period of insurance. For example, on the last day of the policy, the price of bricks may have seen a rise of 15% (as forecasted for 2017) and the BDV value you provided on day one of the policy could be far lower than the actual rebuilding costs on the last day.
The policy includes an allowance (typically adding to a maximum of 50%) for inflation during the year and more importantly, during the rebuilding period which in the event of a serious loss, could be a number of years. Declared value is often referred to as ‘day-one value’. Life Property Management always arrange cover on a ‘day-one declared value’ basis.
The important difference between BDV and BSI is how the policy protects you against inflation of rebuilding costs.
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