The consequences of being underinsured

Don’t get caught out- the consequences of being underinsured

In our previous article we touched on how quickly the market and costs of materials are changing, meaning covers and limits set even just 12 months ago may now be out of date.

The result of this leaves the potential for properties to be exposed and vulnerable should they need to make a claim.

You many think that a close estimate should do the job when taking out a policy, but if you don’t declare the right property building cost, or if you haven’t had your property professionally valued for insurance purposes, you may find that you are drastically underinsured should something go wrong. You can’t turn back the clock when it comes to an insurance policy, once the damage is done, it may be too late. You may find you need to subsidise any shortfall from your pocket which could be detrimental to you or your business.

What is the ‘Average Clause’ and why is it important?

The average clause determines how much your insurer will pay out when it comes to making a claim.

Let’s break this down with an example:

If you insure a property that would cost £600,000 to rebuild for only £300,000, you are underinsured by 50%.

The average clause dictates that whenever you claim on your policy, your insurer will then only pay out a maximum of 50% of any claim you make.

In some circumstances you could find that some insurers may not pay anything out at all if the underinsurance is significantly lower, making it vital to check. it vital to check.

How to avoid underinsurance

Next, we want to help you to avoid you being included in the 9 out of 10 underinsured.

We recommend as well as reviewing your Buildings Insurance annually, it’s important to review your insurance any time you make a significant change such as renovations or in the case of commercial buildings, during times of peak stock levels.

At James and Lindsay we work with RebuildCostAssessment.com to provide you with an accurate valuation of your property, at a discounted rate.

In our next article we will give you tips on avoiding underinsurance, and how we as a business can help.

Don’t get caught out- the consequences of being underinsured

In our previous article we touched on how quickly the market and costs of materials are changing, meaning covers and limits set even just 12 months ago may now be out of date.

The result of this leaves the potential for properties to be exposed and vulnerable should they need to make a claim.

You many think that a close estimate should do the job when taking out a policy, but if you don’t declare the right property building cost, or if you haven’t had your property professionally valued for insurance purposes, you may find that you are drastically underinsured should something go wrong. You can’t turn back the clock when it comes to an insurance policy, once the damage is done, it may be too late. You may find you need to subsidise any shortfall from your pocket which could be detrimental to you or your business.

What is the ‘Average Clause’ and why is it important?

The average clause determines how much your insurer will pay out when it comes to making a claim.

Let’s break this down with an example:

If you insure a property that would cost £600,000 to rebuild for only £300,000, you are underinsured by 50%.

The average clause dictates that whenever you claim on your policy, your insurer will then only pay out a maximum of 50% of any claim you make.

In some circumstances you could find that some insurers may not pay anything out at all if the underinsurance is significantly lower, making it vital to check. it vital to check.

How to avoid underinsurance

Next, we want to help you to avoid you being included in the 9 out of 10 underinsured.

We recommend as well as reviewing your Buildings Insurance annually, it’s important to review your insurance any time you make a significant change such as renovations or in the case of commercial buildings, during times of peak stock levels.

At James and Lindsay we work with RebuildCostAssessment.com to provide you with an accurate valuation of your property, at a discounted rate.

In our next article we will give you tips on avoiding underinsurance, and how we as a business can help.