Are you underinsured?

Recent data shows that that more than 85% of commercial properties are not insured for the right amount. The estimated underinsurance total for all UK commercial properties is £340 billion.

The vast majority of Commercial policyholders insure their Buildings on a reinstatement basis which means that their Sum Insured should reflect the cost of rebuilding in like style including an allowance for site clearance, debris removal and professional fees.

There have been a number of factors recently affecting the cost of rebuilding a property:-

– Increased labour costs and wage inflation

– Materials cost increases

– Materials supply shortages including stock, machinery and plant

– Inflation increases

If your cover does not sufficiently meet your business requirements in the event of a claim, then you are underinsured. Most commercial policies include an “Average” condition whereby if your sum insured is not adequate then Insurers will reduce your claims settlement by the same proportion as the underinsurance. In simple terms if a Sum Insured is £500,000 and it would now cost £1,000,000 to rebuild, Insurers would only pay 50% of any loss.

How to avoid underinsurance

In normal circumstances, it is good practice to have a full rebuild valuation on your property every three years. However, as we are currently seeing the highest level of inflation in some 40 years along with supply chain issues, there has never been a more important time to review your cover to ensure it remains sufficient. We have a collaboration with Rebuild Cost Assessment who are regulated by the Royal Institution of Chartered Surveyors (RICS). Their fees start from £193.50 however we have negotiated a special discount and if you enter code EASTWOOD20 when placing an order online at RebuildCostAssessment.com, you will receive a £20 discount. For buildings valued in excess of £10M and for certain other property types a site visit will be required and a bespoke quotation can be provided.

It is also extremely important that other assets such as Machinery, Stock and Computer Equipment reflect the values at risk to avoid underinsurance here too and for advice on this or any other insurance matter, please speak to your usual contact.

As always, please speak to your usual Eastwood contact if you would like to discuss any of the topics raised in our article.

Share this article on your social media:

Are you underinsured?

Recent posts