Using a mortgage valuation for your rebuild figure

A mortgage valuation is there to protect the lender. In fact, most have a clause that states they may not be disclosed to a third party and it’s not that uncommon, especially on older properties, for a mortgage survey to give a nil valuation. Mortgage valuations are often cursory and not to be used as a basis for insurance.

Setting your buildings sum insured is important. It’s the amount that you will receive from insurers to rebuild your home should it suffer a major loss. So yes, it’s really important.

You should use one of the following to set the buildings reinstatement value:

• Homebuyers R Section K: Valuation
• Buildings survey
• Insurer survey
• Desktop survey

The buildings sum insured should be enough to cover the whole of the buildings, outbuildings, driveways and walls. You can’t simply choose to insure for your estimate of maximum loss.

You should also look out for the ‘Average’ clause when setting your buildings sum insured.  It states that if you are underinsured, insurers can reduce the amount they pay out in the event of a claim. This is often in the ‘How we will pay your claim’ or General Conditions section of a policy. A typical clause reads as follows:

We may only pay the same proportion of any claim as the sum insured bears to the full value of the property.

It’s worth noting that nearly all thatched home insurance policies have the Average clause.

We can advise if your current home policy contains Average, help find you a policy which doesn’t have this clause and help you set your rebuild value to a realistic level.

Insurance advice

To speak to Howden about your insurance, please call 020 8256 4901 or email privateclients@howdeninsurance.co.uk