40% of listed buildings under-insured, says Ecclesiastical

Two thirds of the UK’s half-million listed buildings are insured for an incorrect value, according to Ecclesiastical Insurance.

The data from Ecclesiastical show that owners of thousands of listed buildings are either wasting money on unnecessarily high insurance premiums or could be facing severe financial risk because their property is insured for too little. The data comes from surveys of 300 heritage properties conducted by Ecclesiastical over the last two years.

Overall, 40% of listed buildings were under insured by an average of £1.1 million per property – but Grade I listed owners were the most seriously under-insured at an average of £4.3 million per property.

Conversely, nearly 25% of property owners had over-insured by an average of £2.1 million per property.

Owners of under-insured listed buildings face financial risk because by law they can be compelled to pay for repairs or rebuilding themselves to restore the property to its original state if their insurance does not cover the full cost of the damage. Over-insuring can also leave property owners out of pocket: those Grade I owners surveyed by Ecclesiastical who were over-insured were paying on average £5,000 more than necessary on insurance premiums.

Ian Wainwright, Ecclesiastical’s group chief surveyor responsible for valuations of heritage properties commented: “If what we’ve seen in the 300 properties is representative of these properties as a whole, thousands of owners of listed and other heritage properties could be facing a major financial shortfall in the event of an insurance claim.

“This situation arises when a historically significant property is not correctly valued in the first place. While modern buildings have their rebuilding cost estimated by using some standard formulae, heritage properties have to be valued individually. Valuation estimates must take into account type and cost of special materials, the need for custom-made components and the premium placed on the specialist skills required to carry out the repairs and re-building work. Realistically only a full site survey can establish a realistic figure for adequate insurance cover.”

Other factors that can increase the costs for owners of listed buildings which suffer a loss include planning reinstatement requirements, archaeological investigations, planning conditions and the need to adapt to current buildings or fire regulations.