Why Does My Property for Rent Have Two Values?

If you’re getting your property valued for a Landlord Insurance policy, you’d think you could just look at a final figure in the calculation, and that’s what the property’s worth. Simple.

Well, you’d think…

In fact, what you’ll find is that your property may have either or both of two different valuations — Buildings Declared Value (BDV) and Buildings Sum Insured (BSI). But it gets even more confusing, because these aren’t necessarily the terms that will be used in your policy. The BDV might be described as the declared value and the BSI as the sum insured.

However they’re described, though, it’s essential that you understand what these valuations represent, and that you have the appropriate one on your policy. Otherwise, if you have to make an insurance claim, you may not get as much as you need from the insurer’s loss adjuster.

What Are the Two Types of Valuation?

So why are there two different ways of valuing your property? Shouldn’t the value be the value? And which one will ensure you get the correct payout on your insurance claim?

BDV or declared value — This is the straightforward rebuild cost, taking into account the value of the bricks and mortar, as well as fixtures such as fitted kitchens and bathrooms. It also covers outbuildings and car parks, as well as extra cost, such as professional fees and removal of debris. However, it doesn’t cover considerations like the land’s value or how desirable the area is. Also, the valuation is for the day the policy begins, so if you have a BDV, you may need to have the property regularly revalued.

BSI or sum insured — This will be a higher sum than the BDV, since it takes into account inflation in building costs or appreciation in market value since the policy began. This is particularly important at the moment, since the price of building materials has soared since the pandemic, while there are likely to be delays in getting the work done. That’s likely to push the total rebuilding cost even further up.

It’s tempting, with so much else keeping you busy, to put your insurance policy away and forget about it, but this could be disastrous. It’s vital to look at it regularly (or, better still, have an insurance broker look at it) and check whether it needs to be updated. Then, if you do have to make a claim, Allied Claims can make sure that the loss adjuster has no choice but to pay you the full repair or rebuilding sum.


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