Underinsurance – Are you adequately covered?
One of the key issues in the insurance industry at the moment is the growing awareness through claims, of underinsurance, in particular with regards to buildings sums insured and the reinstatement thereof.
The headline statistics are that following site visits by qualified building valuation surveyors last year, of the 2000 surveys carried out, 87% of the buildings were underinsured, and these buildings, on average needed their sums insured increasing by 55%!!
Below are twelve general ‘pointers’ to help identify potential underinsurance, these being:
- Listed buildings that have not been professionally valued in the last two years are ALL underinsured
- Buildings mad of stone are ALL underinsured
- Buildings generally built prior to 1920 are underinsured
- Most buildings that have never been professionally valued are underinsured
- ‘Green’ buildings are underinsured (the cost of bio-mass boilers etc. not taken into account when calculating the reinstatement sum insured)
- Check with your Insurer/Broker as to the definition of buildings within the policy wording (usually includes trees, shrubs, soft & hard landscapes, boundary walls etc may be included)
- Buildings that are situated in ‘awkward’ places (e.g. narrow lanes/up steps/slopes/bordering lakes & rivers)
- Buildings that haven’t been valued for more than 10 years (Index linking is never enough/Up to date Building Regulations need to be adhered to)
- Buildings that have been ‘souped-up’!
- Buildings that have extensive external features. (Car Parks/Ornate Metal Fencing/Ornate Walls & Pillars etc.)
- Buildings sums insured that have been based upon the developers costs. (Won’t include demolition costs or profit, but will include bulk buying materials savings that won’t be available in the event of a loss to one property)
- Buildings sums insured that have been based upon market value (This will also ‘throw-up’ buildings that are massively over-insured e.g.. Properties in desirable areas)
The above list in not exhaustive, but if all of these are considered when evaluating the sums insured for properties then it will help you avoid being under insured.
As always, if you are unsure about under insurance then contact your insurance professional.