Many property owners focus on insurance when it is due for renewal and then understandably file the information for the rest of the year. An insurance policy should be there for you when you need it, and provide peace of mind in the background the rest of the time.
But what if when you do need to make a claim, it’s only partially successful?
This is the situation more and more companies are finding themselves in: an incident happens, they claim for it, and their claim only partially pays out. Particularly where a building is concerned, policyholders are finding themselves on the line for extraordinary sums after discovering – too late – that they are underinsured.
Reading the T&Cs won’t help
According to research from our sister company RebuildCostASSESSMENT.com, a staggering 81% of commercial properties were found to be underinsured, with the average underinsured building only covered for just 63% of its actual value.*
Amy Lillington, Team Leader at RebuildCostASSESSMENT.com said “You are underinsured when your insurance policy doesn't cover the full cost of a loss. This can happen if you underestimate the cost to rebuild your property or to replace your items. If you do not update your policy regularly due to rising costs, you may become underinsured.”
If your building is destroyed and insured to be rebuilt, the insurer will need an accurate view of how much to pay out to cover the cost of labour, construction, professional fees, and more. Increasing costs of construction materials and labour, plus inflation, means that it will cost more to rebuild a property this year compared to a few years ago – or even compared to last year.
Which type of property is most likely to be underinsured?
According to the same report, the following buildings are the most likely to be underinsured:
- Sports and recreation centres
- Hospices
- Public houses, hotels, and other licensed premises
- Nursing and care homes
- Golf clubhouses
- Vehicle showrooms
- Youth clubs and nursery schools
- Undertakers
- Retail warehouses
- Dentist surgeries.
If you’re concerned your property may be underinsured or overinsured, don’t wait until an incident has occurred to find out. Speak to your local Towergate representative and make sure your building is insured for the right amount.
*This data is derived from RebuildCostASSESSMENT.com’s most recent report, detailing 29,000 UK Rebuild Cost Assessments completed as of 31 August 2023.
