Insurance for Historic Buildings – Risky Business, or Business as Usual?
At Harris Balcombe, we’ve helped quite a few historic and listed buildings to receive the settlement they deserve.
Most recently, we’ve been involved in a major ongoing project involving the Glasgow School of Art’s Mackintosh Buildings. Indeed, we’ve been working with the Glasgow School of Art on this case since May 2014.
It’s not unusual for insurance claims to take a while to process, but the sheer length of this case should make it clear that, when it comes to historic and listed buildings, insurance is a particularly complex area.
Of course, no two insurance claims are ever the same, but there’s a range of unique factors to consider when dealing with historic buildings:
Every Historic Building is Valuable for a Different Reason
Whether it’s a stately home, an old mill, or even a historically-significant yet otherwise ordinary townhouse, every listed building harbours an irreplaceable set of values that warrant a much higher degree of care. And of course, this sort of thing plays a major part when insurance companies are required to assess coverage and protection for historic buildings and their contents.
In short, how do you put a price on contents that are often, quite literally, priceless? How do you go about protecting assets that are often irreplaceable?
It’s thanks to questions like this that insurance claims for historic buildings can often drag on for months, or even years.
Not All Insurance Firms Are Qualified to Deal with Historic Buildings
Because it’s so hard to put a price on their true value, it can be difficult to come up with an appropriate insurance policy. Insurers are usually required to come up with a completely bespoke policy that incorporates buildings insurance, contents insurance, and if the building’s open to the public, business interruption and public liability insurance.
Of course, every insurance policy can be said to be a bespoke package that’s been tailored to suit the specific requirements of the policyholder. But again, historic buildings are different. They demand their own unique considerations.
In an ideal world, owners of historic buildings would only ever work with insurers who have specific knowledge and experience of this specialist subject. But in reality, many insurance claims for historic buildings are handled by insurance companies who simply don’t understand that listed buildings must be treated differently to other, more modern buildings.
And for this reason, the insurance claim process can grind to a halt, as the insurance firm struggles to properly investigate the claim.
Historic Buildings Can Be a Nightmare to Rebuild
If a fire or a flood should strike a modern building, you can essentially take your pick when it comes to contractors who are qualified to make the necessary repairs. But not only does the design and construction of historic buildings make them more vulnerable to damage, it also makes it significantly harder, and significantly more expensive, to coordinate repairs and renovations.
And not all contractors will be up to the task. It takes a great deal of skill to renovate a historic building, and it’s often necessary to bring in specialist architect firms. The restoration of the Glasgow School of Art, for example, is being handled by Page/Park Architects, who have an extensive track record in both restoring and reinvigorating major historic buildings.
But it’s for this reason that listed buildings often have to pay high insurance premiums, and the question of restoration is a further factor in the complexity of processing insurance claims of this nature.
Risk Assessment and the Role of Loss Assessors
As historic buildings are more vulnerable to damage, effective risk management is particularly important.
When assessing the cause of the incident – whether it’s fire, flood, or otherwise – insurers and their loss adjusters will investigate whether reasonable action was taken to prevent the disaster. At the same time, if the owner of the historical building hires their own loss assessors, they’ll work to gather evidence that proves that the incident is covered by the terms of the policy.
This process can take a while even when we’re dealing with comparatively clear-cut cases involving modern buildings. But because historical buildings demand an extra-vigilant approach to risk management, the process of gathering evidence can be a particularly arduous process.
The Question of Historical Value
Most historic building insurance policies will include some form of policy insurance. But this aspect alone can be something of a minefield the moment one starts to consider the historical value of a listed building.
For example, a building or a structure might have a historic value that would be destroyed or compromised were any rebuilding to take place. Alternatively, the building might be part of a group of buildings in, say, a conservation area. In which case, leaving one building in a state of disrepair might devalue a much wider area.
When processing insurance claims for historical buildings, every question will lead to further questions, and it’ll often be necessary to consult a number of expert bodies to determine an answer.
Is it any wonder, then, that claims often proceed at a snail’s pace?
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