Insuring Historic & Listed Buildings
The risks and responsibilities of owning an historic building
Many historic and listed buildings are works of art. Yet home owners, brokers and insurance companies are often unaware of the complexities involved in insuring them properly. There are nearly 500,000 listed buildings in England and their owners have a great responsibility to preserve and protect them for future generations. In fact, the consequences of knowingly under-insuring a listed building could involve legal action.
So how can you ensure that your building is properly valued and protected? Initially, it is important to determine which are the most important features of the building. In the event of a catastrophe with a listed building, English Heritage notes that generally full reinstatement will be required if more than 40% of the historic fabric has survived. However, one should beware of taking this guidance too literally: nearly all of a building may be destroyed, but the remainder could still be the most important part of the building and the entire reason for the listing.
Cover for reinstatement costs
English Heritage provides the following advice: "We strongly advise owners to insure, as a minimum, to cover reinstatement liabilities under legislation and government policies dealing with scheduled monuments, listed buildings or buildings in conservation areas." In other words, you should provide for recovery from a worst case scenario, and you need to determine how much it would cost to rebuild the entire building using like materials and methods of construction.
Proper valuation is essential. Specialist chartered quantity surveyors, architects and insurers can provide advice. The term "specialist" is crucial since the inexperienced valuer may not understand the complexities involved in valuing an historic building.
Many insurance companies and surveyors determine the rebuilding cost of a structure by quickly noting the exterior construction. This is not acceptable for a historic or listed building. From the outside, a building may appear to have been built in the late eighteenth century, but the inner timber structure may date to the fifteenth century. And special features are frequently hidden inside, often requiring the skills of specialist craftsmen to restore after damage.
Good risk management is vital. Historic buildings are particularly susceptible to fire and theft, but steps can be taken to reduce these risks. Since faulty electrical wiring and appliances cause most fires, an inspection by a suitably qualified registered electrician on a five yearly basis is recommended. Security measures should be taken to dissuade forced entry, which often leads to arson. However, all loss control provisions must be carefully designed so as not to compromise or damage the historic fabric or integrity of the building.
If the owners and insurance companies make the effort to document a historic or listed building, and determine an accurate rebuilding cost, the resolution of a claim and the rebuilding process will be made far easier for both parties. It is highly recommended that you as the owner should become involved with the collection of data.
Proper planning today by owners and insurance companies will ensure the survival of historic buildings tomorrow.