Historic buildings can present some of the most complex risks for insurers following major fires. Higher restoration costs, legal complications and lengthy claims processes can all add to the challenge and the recent blaze near Glasgow Central Station has brought those risks into focus.
Jonathan Edwards (pictured left), head of insurance and risk at HCR Law, said some heritage properties are becoming increasingly difficult to insure.
“There appears to be growing concern within the insurance market that some heritage properties are becoming effectively uninsurable. The fire at Glasgow Central Station is a reminder of just how vulnerable older and historic buildings can be and how much more difficult they are to insure, repair and restore than their modern counterparts.”
“Insurance premiums for heritage buildings have risen sharply in recent years and the reasons are not hard to understand,” Edwards said.
Historic buildings often present underwriting challenges because of their age, construction type and the difficulty of installing modern fire protection systems. Where cover is still available, owners may face higher premiums, elevated excesses or the need to seek insurance through specialist markets.
When fires occur in historic buildings, restoration is often slower and more complicated than for modern properties.
Edwards said listed status typically requires repairs to replicate original construction using traditional materials and techniques, which can extend claims timelines and significantly increase costs. He added that “a common problem is underinsurance.”
Standard rebuilding estimates can fall well short of the true cost of restoring heritage structures, potentially leading to disputes during the claims process.
Legal complications can also arise where historic buildings are held in multiple ownership.
“Often older commercial buildings in Scotland such as this are in multiple ownership,” said David McNeish (pictured centre), director of real estate at DWF.
Redevelopment may require agreement between multiple owners and insurers, which can slow decision-making and delay rebuilding.
“The densely-built nature of such sites also adds to the risk of claims from neighbours.”
Major incidents can also disrupt surrounding infrastructure, as seen with the closure of Glasgow Central Station following the fire.
Planning and regulatory requirements can further complicate restoration following major incidents.
Max Roper (pictured right), associate in commercial insurance at DWF in Edinburgh, said repairs to historic buildings often require additional approvals and specialist construction methods.
“When historic or listed buildings require repair, following an incident such as the major fire incident in Glasgow, claim timescales can often be significantly elongated by requirements to obtain various planning permissions.”
He added that many older buildings are subject to historic title conditions which can complicate how repair costs are shared between owners.
“As such, it is always important to engage appropriately experienced professionals (i.e. lawyers, architects and structural engineers) when arranging repairs to historic or listed buildings.”
Laura McCorquodale (pictured immediately above), partner in the construction team at DWF, said these delays can also have knock-on implications for insurance claims and business interruption losses.
“As a result, specialist surveys, heritage impact assessments and extended regulatory processes frequently delay planning approvals and prolong reinstatement periods, with knock-on implications for insurance claims, business interruption losses and policy coverage where increased costs or regulatory delays are not clearly contemplated.”
Edwards said the Glasgow fire highlights the broader challenge of managing risk in protected buildings, adding that “old buildings need a different approach.” Across the insurance market, concerns are growing that some heritage properties may increasingly fall outside the appetite of mainstream insurers.
