AS MANY as nine out of 10 properties in the UK are insured for the wrong amount of which the vast majority (79 per cent) are under-insured.

In our experience some of the common causes of under insurance are:

• Building sum insured mistakenly based on the market value of your property, or a mortgage valuation. For insurance purposes your building sum insured should always be based on the rebuilding cost.

• Where a property has never been professionally valued for insurance purposes or the valuation has not been reviewed in the past three years.

• You have altered or extended the property but not subsequently reviewed your buildings sum insured.

• You are not VAT registered but your building sum insured excludes VAT. In addition, the rebuilding value of your property should cater for costs such as professional fees, site clearance and the replacement costs of periphery items such as gates, fences or car parking areas and any other items as included within the definition of buildings under your insurance policy.

What are the consequences?

If your property is found to be under-insured following a damage claim, insurers could reduce the value of the claims settlement proportionately in line with the amount of under insurance, or in a worst-case scenario consider the under insurance to be materially misleading and refuse to pay any of the claim.

If you own, or are responsible for insuring your business property, it is vital that it is insured for the correct amount.

This will ensure you are not under-insured or even over insured and minimise the risk to your business in the event of a claim being made.

* John Goodacre is a commercial director at PIB Insurance Brokers in York.

To get in touch please email hello@pib-insurance.com; phone: 01904 784141 or visit the website at www.pib-insurance.com

Sources https://www.rebuildcostassessment.com/single-post/2020/10/06/many-underinsurance-disasters-waiting-to-happen