Is your property sufficiently insured?
Thu 08 Jun 2023
The latest data from insurance valuation providers Rebuild Cost Assessment reveals a massive shortfall in cover among UK properties, estimating that buildings occupied by businesses, including landlords, in Britain are underinsured by a whopping £375 billion...!
On average, buildings are covered for just 66% of the amount they should be. Underinsurance can have disastrous consequences for any business and landlord, suffering a major property damage claim, as their insurance will not fully cover the loss, threatening their ongoing viability.
If your property was not sufficiently insured, could you afford to cover any remaining monetary shortfall? Why are so many properties underinsured? Property underinsurance has been an issue for years as many property owners have never had a professional rebuild cost assessment carried out.
Instead, they have relied on guesswork to arrive at a rebuild figure, and this inaccurate sum insured has then been carried across from year to year as the basis for their insurance renewal.
This historical inaccuracy has been exacerbated recently by a perfect storm of inflationary pressures in the construction sector: Supply chain and labour issues caused by Brexit
The UK’s exit from the European Union has meant increased red tape for importing building materials, and a reduction in the available skilled construction workforce. Both of these factors drive higher costs and delays.
Logistical challenges The haulage industry has been severely impacted by both Brexit and Covid, which together have caused an acute shortage of drivers. This has impacted the cost and speed at which construction materials can be delivered.
Ukraine conflict and energy prices Russia's invasion of Ukraine has led to further disruption to supply chains, with associated price hikes for a number of building materials such as timber. Since the invasion, average energy bills have rocketed, increasing the cost of energy intensive building materials such as concrete, steel and cement.
Why does Underinsurance matter? The “Average Clause” included in many property damage insurance policies means that claims payments are reduced proportionately to the level of underinsurance.
A simple example of how this might affect a property claim - let’s say a property is insured for £1,000,000, but the actual cost to rebuild should be £2,000,000. Any insurance claim made for the property could be reduced by 50%.
So, in this example the insured would need to pay £250,000 towards the cost of rebuilding their property following a major £500,000 incident, such as a fire. What should you do if you think you might not be covered? The best way to ensure that you have adequate insurance is to first organise a professional rebuild cost assessment/valuation.
This is something Scriven & Co can help with. Once you have obtained this, you will then be in a position to liaise with your current insurers to ensure that your insurance is sufficient. Our building insurance valuations start from £200.00 plus VAT (£240.00 inc VAT), and we are able to provide services in relation to both residential and commercial property.
To find out more, please telephone 0121 422 4011 selecting option 3.
On average, buildings are covered for just 66% of the amount they should be. Underinsurance can have disastrous consequences for any business and landlord, suffering a major property damage claim, as their insurance will not fully cover the loss, threatening their ongoing viability.
If your property was not sufficiently insured, could you afford to cover any remaining monetary shortfall? Why are so many properties underinsured? Property underinsurance has been an issue for years as many property owners have never had a professional rebuild cost assessment carried out.
Instead, they have relied on guesswork to arrive at a rebuild figure, and this inaccurate sum insured has then been carried across from year to year as the basis for their insurance renewal.
This historical inaccuracy has been exacerbated recently by a perfect storm of inflationary pressures in the construction sector: Supply chain and labour issues caused by Brexit
The UK’s exit from the European Union has meant increased red tape for importing building materials, and a reduction in the available skilled construction workforce. Both of these factors drive higher costs and delays.
Logistical challenges The haulage industry has been severely impacted by both Brexit and Covid, which together have caused an acute shortage of drivers. This has impacted the cost and speed at which construction materials can be delivered.
Ukraine conflict and energy prices Russia's invasion of Ukraine has led to further disruption to supply chains, with associated price hikes for a number of building materials such as timber. Since the invasion, average energy bills have rocketed, increasing the cost of energy intensive building materials such as concrete, steel and cement.
Why does Underinsurance matter? The “Average Clause” included in many property damage insurance policies means that claims payments are reduced proportionately to the level of underinsurance.
A simple example of how this might affect a property claim - let’s say a property is insured for £1,000,000, but the actual cost to rebuild should be £2,000,000. Any insurance claim made for the property could be reduced by 50%.
So, in this example the insured would need to pay £250,000 towards the cost of rebuilding their property following a major £500,000 incident, such as a fire. What should you do if you think you might not be covered? The best way to ensure that you have adequate insurance is to first organise a professional rebuild cost assessment/valuation.
This is something Scriven & Co can help with. Once you have obtained this, you will then be in a position to liaise with your current insurers to ensure that your insurance is sufficient. Our building insurance valuations start from £200.00 plus VAT (£240.00 inc VAT), and we are able to provide services in relation to both residential and commercial property.
To find out more, please telephone 0121 422 4011 selecting option 3.