Are you underinsured?
Data from RebuildCostASSESSMENT.com shows that, after assessing more than 2,000 commercial properties (from shops, hotels, offices and factories) 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.
With recent rises in inflation, there has never been a more important time to assess the rebuild cost of your property to check if you’re underinsured.
What is underinsurance?
If your cover does not sufficiently meet your business requirements in the event of a claim, then you are underinsured. This can be due to setting cover limits too low or insuring assets for insufficient amounts.
While being overinsured is also a risk when you take out commercial building cover, underinsurance can have far more devastating consequences.
For example, if your property is covered for £1,000,000 but is only insured for £500,000, then the amount payable will be reduced by 50% because the building is underinsured by 50%. This means if claim for only £10,000, despite being insured for £500,000 of your property, you are still 50% underinsured. This means that the insurance company will only pay 50% on the £10,000, leaving you with a maximum of £5,000.
How to avoid underinsurance
In normal circumstances, it’s 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.
You will also need to consider your reported turnover too. If this isn’t reported correctly, you may find that the payment falls short in a business interruption claim.
To find out more about underinsurance and to have a no-obligation review of your current cover, get in touch with The Insurance Centre on 01524 848506.
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