Insuring Period Property Conversions
Is your home part of a period property conversion?
Who is responsible for your security and insurance arrangements?
Are you sure the building is adequately insured?
How much would it cost to rebuild?
You no longer need a title to live in a stately home - nor even a multi-million salary. In the last 10-20 years, some of the UK's most stunning historic buildings have been converted into beautiful apartments and presented to ordinary people to live in. However, if you are lucky enough to have found such a haven, you'll also know that there are many difficult issues and responsibilities that come with the territory. Insurance is one of them - especially if the building is listed.
Getting cover at all
Changing insurance market conditions mean that occupants of these rural conversions are encountering problems in finding adequate insurance. With terrorist threats and the recent floods, insurers are more nervous about the risks they will underwrite - they only want to know about risks they really understand and have direct experience of - with statistical data to back them up. Most insurers are used to covering apartments in modern buildings - a period home with apartments is a completely different risk. The differences include:
- The size (value) of the property (often £5m plus)
- The construction - features like timber flooring make insurers nervous
- The condition - old wiring is a major fire risk in historic buildings
- The quality of conversion - are the partitions fire proof, are there fire walls in roof spaces and basement? Will fires spread?
- Proximity of fire brigade - rural settings may be less accessible
- Availability of fire hydrants
Getting the right cover
Many historic buildings are alarmingly under-insured - and in fact, the consequences of knowingly under-insuring a listed building could involve legal action.
A Georgian house converted into 10 apartments was insured for £3.2m; following a comprehensive appraisal, taking note of specialist construction materials, the true value was revealed as £7.8m. In the event of a fire, the residents would have been out of pocket by £4.6m!
Most insurance companies and surveyors determine the rebuilding cost of a structure by quickly noting the exterior construction. This is not acceptable for a historic 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.
Specialist insurers offer cover for buildings, contents (including garden statuary etc), liabilities for staff (gardeners, maintenance etc) - and some offer additional cover at no extra cost (eg: a property insured for £5m is actually covered up to £6.25m).
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.
What you need to cover is the building's reinstatement value rather than its market value: if the whole property burned down, how much would it cost to restore rebuild the entire building using like materials and methods of construction? If the property is made from a certain type of stone, has special roof tiles, or historic features such as fireplaces and cornices, it takes expert knowledge to determine the figure. Specialist materials and craftsmen may be involved, and there may be costs associated with making the property safe during the rebuild.
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.
Getting the right advice
Historic buildings come with their own unique set of risk exposures, and getting good advice on risk management is essential.
Residents associations set up to look after the property benefit from the pooling of ideas and resources, and often provide excellent risk management. Make sure yours has considered:
- Fire alarms: a good system will secure preferential terms in your insurance premium. Ideally they should be linked to a central station.
- Fire officer: arrange a visit at least every 3 years so that they understand the layout or the property and location of hydrants/water sources
- Maintenance fund: most residents contribute to an ongoing programme of upkeep to protect against storm damage etc (eg: roof and lead flashing, perimeter fencing)
- Access control system: keep the main door and common areas locked - use an intercom with buzzer
- Vehicle security: even if garaging is provided, it's good to have some cars parked outside to indicate the building is occupied
- Procedure with strangers/unrecognised visitors: agree to record vehicle registrations or question strangers if suspicious
- CCTV may be a consideration
However, security provisions should be carefully designed so as not to compromise or damage the historic fabric or integrity of the building.
In the event of loss or damage, a specialist insurer will be able to put you in touch with appropriate craftsmen and contractors for the repair work. Other insurers may insist you use their chosen non-specialist contractors with whom they secure discounts.
At the right price
Well-managed, well-run properties should benefit from more favourable premiums. A specialist will ask the right questions and calculate the premium according to level of protection. They will know that:
- Period property conversions are unlikely to remain unoccupied for long periods - they have a sort of built-in "neighbourhood watch" scheme
- A fire will be quickly identified as there are many occupants around
- Residents' Associations usually operate good maintenance programmes - so the risk of storm damage is reduced
All these factors operate on the plus side when working out the insurance rates. And for home contents, rates should also be lower due to the high level of occupancy and the likelihood of there being art and antiques, which are surprisingly cheaper to insure than modern contents.
Specialist insurers need to work closely with Residents' Associations to help reduce insurance premiums and facilitate swift resolution of claims, as well as ensuring the preservation of our architectural heritage.
Period Property UK, in partnership with specialist insurance broker inet3, now offers a specialist policy for period property conversions.