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Dangers of index linked insurance for listed properties

An Englishman's home is his castle – so the saying goes. If you live in a Grade II listed building, the investment in your 'castle' is bound to be large. For most people, their home is their single biggest investment and yet few give sufficient thought to protecting it. The recent floods have highlighted the importance of being adequately insured – and the sad consequences of being totally uninsured (we have all heard the emerging horror stories featured in the press).

Properties are usually valued when they are purchased, but not many home owners give the matter any further thought and just rely on index-linking to keep the sum insured up to date. Most people add value to their homes – especially when they are being restored or are a labour of love, constantly being updated and revamped, and so the system of index-linked increase is seriously flawed. Re-building costs do not remain constant, and if you have a building which is of fine quality or over one hundred years old (and especially if it is listed), then the variable becomes even greater.

For listed buildings, there is a requirement to replace decorative features and material with like for like, and this may also apply to the exterior of buildings in recognised conservation areas. These obviously increase the costs, and you must serious thought to increasing your insurance cover if any of the following apply to you:

> Properties of timber frame construction

> Properties with finely carved stone or decorative brickwork construction

> Properties with thatched roofs

> Properties containing exceptionally high quality interiors

> Very large properties

> Properties which span different build dates

> Properties in a conservation area

Don't be caught out. If disaster should strike, you need to be confident you can replace the home of your dreams with like for like. Take professional advice – and remember to include the rebuild cost of bespoke bathrooms and kitchens, integral CCTV and alarm systems as well as external additions such as swimming pool, tennis court and garages.

Posted on 18th February, 2010