insurance

The following Q&A is intended to provide outline guidance only for owners and other interested parties on the relationship between listing and insurance.  Owners and tenants will wish to consider whether they need to take their own legal and other specialist advice on the insurance implications of loss or damage to their property.

Will listing require me to take out higher insurance?

Insurance of any building is likely to be based upon the rebuilding cost needed to return the building to its state before catastrophe strikes. A valuation of a  building that might be expensive to reconstruct might well exceed its market value, whereas a modern building could be replaced at less than its market value. This has implications for the owner of any building, listed or not.

Listing does not require an owner to increase the insurance cover for their building.  It is for each owner to decide what is appropriate to cover possible risks and to protect the value of their asset.  Because of the age and character of a listed building, repairs and insurance premiums may be more expensive than repairs to an equivalent modern building but will be very similar to a traditional, but unlisted building.  An owner is not obliged to insure against more risks than would be covered for any building of similar use or value.

If my listed building suffers catastrophic loss will I be required, because of its listed status, to rebuild it as it was?

As a general rule, listing exists to protect the special architectural or historic interest of a building and this is unlikely to be found in a replica of the original. This is a matter for the Local Planning Authority. An owner of a listed building is not required to rebuild a property following total destruction.

There are well-known cases - such as York Minster or Windsor Castle - and many more less well-known examples (Ca d’Oro, Glasgow; Cullen House, Moray; Morgan Academy, Dundee; Glasgow University Chemistry Building) where buildings have been partially destroyed and thereafter restored but this is not generally achieved solely through the listed building consent system. While in exceptional circumstances restoration might be the route chosen by the owner and insurance company (such as occurred following the catastrophic fire at the National Trust property at Uppark in West Sussex), this is very unusual.

Where the building formed an integral part of an important architectural entity such as a terrace, the exact reinstatement of at least the exterior may be required by the local planning authority in some circumstances.

What reinstatement may be required in the event of partial damage?

Partial loss is much more common and open to a considerable amount of interpretation.  The loss of a single door, for example, that forms part of the character of the building in a listed building is likely to require replication, as a non-matching re-instatement may be refused consent.  An insurance policy designed to cover this event would need to offer like-for-like replacement. If the interior is almost entirely lost but the shell remains substantially intact, repair of the external walls and reinstatement of the roof to their appearance before the fire may be required but rebuilding of the interior in a different manner permitted. It is largely a matter of interpretation and degree.

Further information on making a property good after fire damage can be found in the Memorandum of Guidance on Listed Buildings and Conservation Areas, Appendix 3.

How can risks and premiums be kept down?

There are several ways in which this can be achieved.  Owners are advised to reduce the likelihood and scale of loss by securing their home. Loss prevention programmes can be devised with insurers and advisors. Particular threats to be considered are fire, water damage, vacancy and break-in. Periods of repair or alteration can expose a property to these risks and require careful management.

Owners are advised, as with any property, to seek a range of quotes from insurance companies and to refresh the chosen premium at regular intervals.  Group Policies, First Loss Insurance or an excess may be among the forms of insurance that a specialist broker may recommend other than total reinstatement insurance, which is calculated on full rebuilding costs. The conditions of any mortgage or loan may have to be followed.

Will I be required to keep my building in good repair?

Listing does not require an owner to maintain their building but action may be taken by local authorities against an owner who allows his or her listed property to fall into serious disrepair. Owners are responsible for the repair and maintenance of their property, and for public liability insurance, just like the owners of any other buildings. Listing does not change this responsibility.  However, it does give access to a wealth of advice and expertise on conservation matters from Historic Scotland and the local planning authority.

Who can I contact to discuss the availability of appropriate insurance?

Owners of complex buildings are strongly advised to obtain advice from specialist insurance brokers.

The following bodies may also be able to provide advice:

• Royal Institution of Chartered Surveyors (RICS), 9 Manor Place, Edinburgh EH3 7DN, Tel 0131-225 7078.
• Royal Incorporation of Architects in Scotland, 15 Rutland Square, Edinburgh EH1 2BE, Tel 0131-229 7205.
• Historic Houses Association, 2 Chester Street, London SW1X 7BB, Tel: 020 7259 5688.
• The Financial Services Authority can advise on matters related to insurance.
• The Architectural Heritage Society of Scotland is familiar with owner queries and may provide further information. Contact The Glasite Meeting House, 33 Barony Street, Edinburgh EH3 6NX, Tel 0131 557 0019, email glasite@ahss.org.uk.