Insuring your period property - what to consider by Emmeline Henderson, IGS Conservation Manager & Assistant Director
The Irish Georgian Society often receives enquiries from our members and the general public related to insuring their period properties. Owners of buildings over 100 years old can find that both obtaining accurate reconstruction cost assessments and acquiring adequate insurance is not straight forward. This is on account of the design and construction of period properties often making them both more vulnerable to damage, especially by fire, and more expensive to repair afterwards. This has resulted in some regular insurance companies refusing to insure older building or charging high insurance premiums for policies, which in the event of a claim being made may prove inadequate. Matters can be further complicated by the statutory obligation faced by owners of period properties when their building is listed on the Record of Protected Structures or located within designated Architectural Conservation Areas. This article highlights the need for adequate and appropriate insurance, identifies potential pitfalls, as well as reminding readers of the importance of implementing risk management measures, which can help minimise the need for insurance claims to be made.
Insuring period properties is a specialist area, and it is advisable that owners seek insurance from an insurer or broker with specific experience and knowledge of historic buildings. Insurance is based on the principle of utmost good faith and it is imperative that you provide your insurer or broker with sufficient and accurate information. If underwriters discover that there has been a material mis-statement or non-disclosure, your insurance could be invalidated.
Insurance for your period property can either be obtained on a total reinstatement basis or a first loss basis or an agreed value basis.
If your building is completely destroyed then insurance for total reinstatement should provide enough money to rebuild the property completely to the same design and in the same materials as before. Equally in the event of partial loss, which is a much more regular occurrence, owners will be covered to the full cost of rebuilding or renewing the part of the building damaged or destroyed.
First loss cover is the term used to describe a type of cover (usually suited to large estates with buildings attached) that reduces the sum insured to cover the likely damage to any particular building. For example, a large three winged building is unlikely to experience total loss to all three wings in the event of a fire, so first loss might cover any one wing.
Agreed value insurance is most suitable for works of art, such as sculptures or wall paintings, which are incorporated into the fabric of the building: marble fire places would also be suitable for agreed value insurance. These elements can be insured for an agreed value, which corresponds to the cost of proper conservation in the event of damage through, for instance, fire or attempted theft, or in the event of total loss, of commissioning a contemporary artist to create a replica.
A condition of average is included in most property insurance contacts, which will result in the owner being held liable for rebuilding costs that exceed the sum insured. The condition of average is included to protect the insurer in the event of significant under-insurance, whether intentional or not.
And it is this condition of average that owners of period properties must fully comprehend; for it provides that the insurer will settle a loss in the same proportion that the sum insured bears to the actual rebuilding cost for the property as a whole. For example if your period property is insured for a total reinstatement value of 1 million euro and suffers fire damage which amounts to 500,000 euro you would imagine that your insurance would be more than adequate to repair that damage. However at the time of lodging a claim with the insurance company a loss adjustor will be sent out to your property to verify the evaluation of damage suffered. At that time the loss adjustor will also determine whether an accurate cost estimate for the total reinstatement of your property was provided to your insurance company. If the loss adjustor verifies that indeed your home has suffered 500,000 euro worth of damage but he also determines that the total reinstatement cost of your home should not have been estimated at 1 million euro but rather 2 million euro, then the condition of average can result in your insurance claim not being paid at the full amount (i.e. 500,000 euro) but being reduced proportionally. This would mean you receive only 250,000 euro to repair the damage to your building, which is a shortfall of 250,000 euro.
This is why it is imperative that you provide your insurance company with an accurate estimate of reconstruction costs, otherwise you are gambling with what is most probably your most valuable and precious possession.
In many modern homes the Society of Chartered Surveyors' Building Cost Information Service (BCIS) Guide, which is calculated on a cost per square meter approach, and is issued by the Society annually, will suffice in providing an accurate minimum reinstatement estimate. However for a period property a bespoke tailored estimate is desirable. Known as an elemental cost analysis, this will entail the definition and quantification of all the elements of the building and assessment of their rebuilding costs.
In period properties, particularly buildings listed on the Record of Protected Structures or located within Architectural Conservation Areas the basic tenant of conservation, namely of replacing like with like, will apply. As such your cost analysis will need to establish the construction method employed and the types of materials used, as planning authorities may not accept substitutes. For example it is unlikely that you will be permitted to replace a damaged or completely lost natural slate roof with artificial roof tiles on a building that is either listed on the RPS or located within an ACA. And as a general rule of thumb the cost of traditional building materials, as well as the employment of traditional craftsmen able to work with these materials is more expensive and that will need to be borne in mind when devising the cost analysis. The cost analysis should also make particular note any special finishes or unusual features such as decorative plasterwork ceilings, ornate carved barge boards or elaborate fanlights, the replication of which would incur additional expense.
This cost analysis should be provided by a Chartered Quantity Surveyor with specialist knowledge of historic buildings, a building surveyor or architect with conservation expertise can also provide such advice. Your surveyor should be a member of the Society of Charter Surveyors well versed in surveying historic buildings, preferably one that has completed the SCS conservation accreditation scheme, there are also a number of surveyors with conservation accreditation from the UK's Royal Institute of Chartered Surveyors operating in Ireland. If you are using an architect to provide your cost analysis they should be Royal Institute of Architect of Ireland Conservation Accredited, Grade I or II. A number of insurance companies also provide a cost analysis, but as they are not professionally accountable for the accuracy of their cost analysis, their advice should only be relied upon if they are prepared to warrant that their own cost assessments will not be subject to a condition of average.
Obtaining adequate insurance is not only desirable for owners but can be a legal obligation, as is the case where homes are mortgaged. However, in addition to this if your building is listed on the Record of Protected Structures or located in an Architectural Conservation Area holding adequate insurance is often the only way that an owner of a period property will be in a position to fulfil their statutory obligations to re-build or repair their building if requested by the planning authority.
In its Architectural Heritage Protection Guidelines for Planning Authorities the Department of the Arts, Heritage and the Gaeltacht outlines the recommended stance that planning authorities should adopt in the event of total loss, partial loss, as well as in the event of total and partial loss of an interior. The Guidelines note that in most cases where a disaster such as a fire has caused total or near total, loss of a historic building, the special interest which led to its inclusion in the RPS may be considered irredeemably lost and the building of a replica replacement will generally serve little purpose. In such cases, the DoAHG states that it is appropriate for the planning authority to delete the building from the RPS, and as such the under insurance of the building may not present a problem for the owner. However, if the building forms part of a larger architectural design such as a terrace, square or other group of buildings or was an important urban or rural landmark, then the planning authority may stipulate that the reconstruction in replica of at least the exterior of the building will be necessary in order to protect the setting of other historic structures or the character of an ACA. And this is why it is important that owners secure adequate insurance.
However the occurrence of total loss of a building in a disaster is very rare and partial loss of a building is more common. Partial loss can be more problematic and a careful assessment of the remaining fabric will be needed. The planning authority will form a judgement as to what constitutes the special interest of the structure and to what extent that special interest has been compromised by the damage. The planning authority when assessing the type and extent of the damage and the importance of the damaged portion to the quality of the whole will need to decide the point at which the building is so damaged that full reinstatement is neither worthwhile nor desirable. When reaching this decision, however, the planning authority will be mindful of the effect of the damage on adjacent protected structures or on the character of an ACA.
The DoAHG Guidelines suggests a common sense approach be adopted by planning authorities and indicate that in the event of an interior of a protected structure being almost entirely lost but the external shell remaining substantially intact, it would be reasonable for the local authority to request that exterior of the building be repaired but that the interior to be rebuilt in a different manner. However they caution that this decision will depend on the quality of the interior before the disaster occurred. Where a high-quality interior has been damaged and substantial fragments remain, the recreation of the interior incorporating those surviving fragments may be required, provided that that recreation can be conducted without an undue amount of conjecture.
This raises the issue of creating a reliable record of your building, preferably comprising measured floor plans cross-referenced to a photographic record. A video record is also valuable, and with all three mediums an emphasis should be placed on documenting historic fixtures and fitting, as well as special external finishes. This record, which would facilitate a faithful reinstatement of the whole of your building, or part of your building, in the event of a disaster, should, obviously, be held off the premises.
However, prevention is better than cure, for no matter how accurate the restoration, the authenticity of a wholly or partly reconstructed historic building has been undermined and its architectural and artistic significance diluted.
Consequently as important as obtaining adequate and appropriate insurance for your period property is the need to ensure that all reasonable measures are put in place to minimise the chances of one needing to make an insurance claim.
Owners of period properties should adopt a risk management strategy to reduce the chance, or extent, of damage to their homes, as well as devising an emergency procedure.
An emergency procedure should contain details of escape routes, a grid reference for emergency services, as well as information on the location of water and gas isolation valves and electricity mains shut down. The emergency procedure can also include identification details of valuable contents such as antiques and paintings, which can be removed to safety in the event of an emergency. Several copies of the emergency procedure should be located throughout your property so that they are easily accessible and, crucially, occupants of your home should be made award of the procedures and the whereabouts of the copies of the procedures.
The risk management strategy entails measures, which will reduce the likelihood and extent of damage to your home and therefore claims needing to be made. A risk management strategy might entail the installation of fire detection and security systems. Security systems might include intruder alarms, surveillance, and lighting systems, as well as adequate locks for doors and windows.
Fire detection and prevention systems include smoke alarms (preferably mains powered ones), installation of sprinkler systems and provision of fire extinguishers.
When considering certain fire and security systems it is important to ensure that they are designed sensitively in order that they do not compromise the very character that one is aiming to safeguard.
Other risk management strategies can include simple low cost but effective measures, such as making sure you lock doors to impede intruders gaining access, closing doors behind you to stop fire and smoke spreading, and unplugging unattended electrical appliances, in particular mobile phone chargers which can overheat and are proving a common cause of fires today.
To re-cap: remember that it is in both the homeowner and insurer's interest that risk management strategy and an emergency procedure is put in place as nobody benefits from an insurance claim; owners of period properties should be mindful of the condition of average and ensure that their homes are adequately insured, in particular if their home is a protected structure or located within an architectural conservation area otherwise they may not have sufficient funds to reinstate or repair their building if required to by the planning authorities; a specialist conservation quantity surveyor is best placed to provide an accurate cost analysis reinstatement estimate for the purpose of insuring your period property; and dealing with insurance companies and brokers with a specialist understanding of period properties can help ensure appropriate and adequate cover is achieved.
Department of Arts, Heritage and the Gaeltacht's Architectural Protection: Guidelines for Planning Authorities (www.chg.gov.ie/app/uploads/2015/07/Architectural-Heritage-Protection-Guidelines-2011.pdf)
English Heritage and Royal Institution of Chartered Surveyors Insuring your Historic Building: Houses and Commercial Buildings (https://historicengland.org.uk/images-books/publications/insuring-historic-buildings-and-other-heritage-assets/heag262-insuring-historic-buildings)
Irish Georgian Society's Traditional Building and Conservation Skills Register of Practitioners (www.igs.ie/conservation/list/register/category/insurance)