The Insurance Risks And Problems Associated With Insuring Historical Buildings
Historical buildings and insurance have a relationship that is long and complex
. The insurer is responsible for calculating a financial arrangement that is fair and equitable for the policy holder, as well as providing sufficient coverage for the historical building. The calculation of the policy costs takes into consideration the actual value of the building (sales price) and the price of replacement or repair, should severe damage or total loss occur.One major issue is the availability of repair materials, since in most cases identical construction materials are no longer manufactured. A building's intrinsic value and historic significance is greatly reduced when modern construction materials are used for repair or rebuilding. In fact, reinstatement does not preserve the original value of the historical building, no matter the quality of the craftsmanship.
Historical buildings are more susceptible to fire or water damage or destruction than most modern buildings. This is another factor that seriously affects policy costs.
These issues result in intensive risk review processes for historical buildings and insurance. Certain procedures for risk reduction are required and strictly enforced by the government. These procedures concern fire safety, theft and damage, among others. Your insurance specialist will explain these procedures to you during your initial policy consultation.
There are many risk reduction tools that you can implement, including fire, smoke and burglar alarms, sprinkler systems, fire doors, an indoor no smoking policy and regular electrical, plumbing and structural inspections. Implementation of personal risk reduction procedures can earn policy discounts that, in turn, reduce your insurance cost, and create a smoother relationship between owners of historical buildings and insurance carriers.
Insurers offer a selection of coverage that is appropriate for the historical building. However, when you purchase your policy, you must provide full disclosure of all relevant facts pertaining to the building. Failure to do this is a violation that can result in immediate cancellation of your coverage. It is also necessary to retain permanent records pertaining to historical buildings and insurance documents. These records should include insurance policies, plans and/or blueprints, surveys and photos of the interior and exterior of the building and/or property. Make sure a copy of your records is safely stored off-site in case of a major loss.
The property insurance policy is the main provision of insurance protection, as it covers the building structure, fixtures, fabrics and external features against physical damages. Several levels of reinstatement coverage are available. The total loss policy is the most expensive, but also provides the largest dollar amount of coverage. Careful review of each option is recommended before choosing your policy.
You may choose to add additional coverage policies for other items related to the building. Each type addresses a specific concern related to the building, and each has its own price tag. Most people purchase contents insurance. This covers your personal possessions and other items located inside the building.
Other options to consider include engineering insurance, third party insurance, consequential loss, gardens/ornaments, and terrorism coverage and building works. Ownership of historical buildings and insurance issues related to them are difficult to understand and require extensive research and careful consideration.
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