Note : This chapter of the Guide is only intended as a guide to better understanding of your policy and of the actions that you must take in various situations. You must refer to your Policy wording and Schedule for precise details of your cover and all terms, conditions, limitations and exclusions applicable to it.
Description and Sums Insured
Insurance cover of the School Property is often considered to be the least important part of the policy. In fact, it is worthy of the most serious consideration in view of the potentially disastrous situation facing the Board in the event of:-
(a) Sums insured proving to be inadequate following a serious fire or other damage to property.
(b) The omission by the Insured to insure all property owned by or the responsibility of the Board
The term “the Insured” is defined in the policy as comprising - the School, the Patron, the Trustees and the Board of Management / Governors.
Description of School Property
This is often taken for granted until a loss arises. If there are a number of buildings and / or properties owned / occupied by the School, it is important that each is specified in the policy schedule. Make sure, therefore, that you describe each property adequately showing a sum insured for each (see table on the next page for an example).
The adequacy of the sum insured is vitally important in ensuring that you are properly protected in the event of a serious loss. The sum insured represents the maximum amount that can be recovered under the policy.
This means that if, in the event of a major loss, the cost of a claim exceeds the sum insured, then the Insured (the Board) will be responsible for any resultant shortfall.
Who is responsible for deciding the sum insured?
The Insured (the Board) is responsible for setting the sum insured.
How does the Board decide on the sum insured?
There are a number of factors which need to be taken into consideration in deciding on the sum insured.
The appropriate sum insured will depend on the basis of cover selected by the Insured. The Custodian School Protection Policy provides for 2 main alternative methods for insuring buildings,
Reinstatement (Cover B) or Reinstatement in Modern Materials (Cover C).
(a) Reinstatement (Cover B)
The sum insured should represent the full cost of rebuilding the property in the same manner and using the same materials as before any loss destruction or damage. In the case of a building which is old and incorporates such features as cut stone, the task of rebuilding could prove to be both difficult and costly.
The Board is recommended to obtain an informed valuation from a quantity surveyor, architect or similarly qualified person in relation to the full cost of reinstatement. The valuation should include provision for:
(i) cost of materials necessary to rebuild,
(ii) costs of clearing the site (including demolition) and debris removal,
(iii) costs of site works and drainage,
(iv) fees of architects, surveyors and other professional advisors,
(v) an inflation provision based upon the estimated period between destruction and
reconstruction, all inclusive of V.A.T.
(b) Reinstatement in Modern Materials (Cover C)
The sum insured should represent the cost of building a new structure in modern materials.
In the event of partial damage the repairs would be undertaken as far as possible in existing materials. Therefore in deciding on a sum insured, care must be taken to make provision for repair costs to cater for a situation where there is a substantial partial loss and repair, rather than rebuilding, is still possible. Allianz representatives can provide you with some indicative guidelines in relation to the average costs of building a modern school. Option C (ie cost of building a modern school) is not suitable where the building is a protected structure or where full reinstatement of the existing property in existing format would be required.
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The sum insured should be based on the cost of replacing all of the contents in the building. The term Contents includes floor coverings, furniture, audio or visual equipment, furnishings, curtains, blinds, computer equipment, games equipment, office equipment etc.
Should the Board carry out a valuation every year?
It is not necessary for you to arrange a professional valuation every year because the valuer will be able to advise of the percentage by which you should increase the sum insured in subsequent years. However we do recommend that full valuations be carried out every seven years.
Additionally, the policy is Index Linked. This means that the sum insured on buildings is regularly increased in accordance with the House Building Cost Index issued by the Department of the Environment and the sum insured on contents is increased in accordance with the Consumer Price Index issued by the Central Statistics Office. When your policy is due for renewal the Renewal Notice will show the new sums insured for each item.
However, whilst these indices will provide for some increase in sum insured, they do not necessarily reflect the full inflationary effects of building costs which could result in underinsurance in the absence of professional advice.
In the event of a fire or other serious loss, index linking continues for a period of 12 months from the date of damage or destruction. If the period of reconstruction is likely to exceed 12 months, be sure to allow for total inflation in the period. Allianz representatives can advise on the best methods of providing for this inflationary provision.
Are there any other factors that need to be taken into consideration?
A significant factor in the process is the length of time which it will take to rebuild. In the event of a serious fire, reinstatement will involve all or most of the following:
(a) Demolition and site clearance;
(b) Plans for repair or rebuilding;
(c) Planning permission;
(d) Tendering process;
all of which will impact on the rebuilding period.
What about protected structures?
If the building is designated as a protected structure under the 1999 Planning Act, then there may be a requirement to rebuild in exactly the same manner and using the same materials as before any loss, destruction or damage. In these circumstances the sum insured should reflect Reinstatement (Cover B).
Are valuables such as pictures or antique furniture covered?
The cover provides for repair or replacement and in practical terms this is generally a modern equivalent. If a picture or piece of furniture or valuable has a particular value because of it’s rarity, age etc, then it should be specified separately in the schedule. A professional valuation of the item will be required.
Are Fire Brigade charges covered?
Yes, fire brigade charges incurred as a result of or arising from an occurrence which is insured under Section 1 Property of the policy are included for an amount not exceeding €25,000 any one claim.