Apparently my buildings insurance is underinsured

[chicaguapa]

We have a BTL with LL insurance on it. (We are accidental LL as we moved areas for DH's work and couldn't sell the house & still can't.)

The tenants recently had a fire (arson by a third party) and we've had to claim through our buildings insurance. A loss adjuster visited the house and apparently we are underinsured by 20% so they are only paying out 80% of the cost of the repairs.

So I've looked back through our policies, back to the rebuild figure given on our survey when we bought the house 9 years ago. This was the first figure we insured it at. After that it has been insured at the figure given at renewal, either with the existing insurer or I used that rebuild figure when getting other quotes.

I've also looked at MSE and been to the RCIS site suggested for calculating rebuild costs and it's come out at more or less the figure we have it insured at (we are insured at 3% less than the figure given).

I've gone back to the insurance company and challenged their figure. It is a bog-standard 15 year old house with original bathroom/ en suite and a 9 year old kitchen so it does not have high quality fittings which would bump the cost up.

I was just wondering if anyone has an experience of this please? I know insurance companies don't like to pay out but we don't have a history of claims. Our last claim was 6 years ago from a leaking radiator that flooded the upstairs when we were away for a week. I am reasonably savvy about finance so I'm a bit befuddled that we've ended up in this situation (ie £800 short of the cost of the repairs to the house).

Thanks.

[MillyMollyMama]

We have had the same problem. The loss adjuster came out and made wild assertions about rebuilding costs and fittings in the house trying to say we had underinsured. We, like you, had paid what they suggested and my DH deals with insurers for his job and proved to them we were not underinsured because we had taken every aspect of the house into account.

Be very firm and use the information you have to get your money. The insurers try this on to save them money. Ours is quite a complex house and we took our insurance seriously. My DH factored everything in and we also have several buildings. If you have a bog standard modern house, with standard construction, they are definitely trying not to pay because the rebuilding formula for your house is straightforward. If you have handmade bricks and roof tiles, a complex architectural masterpiece, very expensive kitchen and flooring, you may be a bit low, but if you are pretty standard, you are probably not underinsured. You should also factor in demolition and clearance costs when insuring by the way.

[chicaguapa]

Thank you. I'm definitely going to follow this through with them then if they have previous for this kind of thing.

Comparing the figure they've given in the survey when we bought the house 9 years ago, the rebuilding costs have apparently increased by 53% over that time. Apart from putting in a new kitchen, we haven't done anything else to the house. It's even worth exactly the same as we paid then.

[specialsubject]

you've been doing all the right things, allowing for inflation and using the right figures. Get back to them and argue, and be prepared for a battle via the ombudsman.

[chicaguapa]

I'm more than happy to take this on tbh.

Fortunately we are remortgaging the house at the moment so a valuation has just been carried out. I have asked the lender to send us a copy of the survey so we can see what rebuilding cost they are quoting.

In the meantime I've calculated RPI increases to the starting figure in 2005 and it's coming up higher than we've got it insured for. But on the basis that I haven't picked any rebuild figures out of the air and have used those given on renewal, I should be able to show that we have insured the house value in good faith.

Thanks.