Let’s face it, from time, we have what we would regard as an ‘average day’ but, when it comes to insurance, “average” is just about the very last word that you want to hear.
Let’s look at a rare but painful example. The phone rings – your alarms been activated at work; you arrive at the office and stand to see a burnt out building. So, your worrying about how you are going to rebuild, not just the physical building, but your whole business and the livelihoods of your valued employees.
Finding out that the average clause will apply to make the situation ten times worse.
Put simply, the average clause applies when the sum insured on your policy is insufficient to achieve the reinstatement of your premises as new (this is under-insurance). And perhaps the most important thing to remember is that you, as a business, are responsible for setting that sum insured. If you are under-insured, it’s your fault, and therefore, your problem.
Fortunately, help is available from your insurance brokers as well as other professional advisers. it’s the job of your insurance broker to ensure that you are aware of exactly what you are covered for and what your sum insured should cover. It’s vital that this process is completed correctly.
It’s often easy to think that you know how much your premises cost to build, particularly if they are new. However, in the event of a claim, there are other costs that you should also consider. First and foremost is the cost of potentially demolishing the remains of a building and clearing the site. These costs can really climb!
Then there are the costs of professional fees, the fees incurred in engaging architects and surveyors to plan your new building. There may also be costs involved in submitting your new plans for planning permission, this can cost time and more money.
All this before you have even laid a spade in the ground. These costs can often add at least 15% to the costs of a building project and they can only be properly assessed by regular surveys of the premises by a qualified surveyor.
Even then, it’s important to let the surveyor know that the purpose of the survey is for insurance reinstatement. The difference between market valuation and an insurance valuation is often quite a lot. It’s key to get this right to avoid falling into the under-insurance trap.
It’s also very important to note that the definition of buildings often includes items like gates, perimeter fences, staff car parks, underground services so they all must be factored into the sum insured.
We strongly recommend that if you have not had your property valued in the last 5 years, you act now and get support. Costs can vary from time to time and even region to region, and not regularly updating your property sum insured value can make an ‘average day’ into a really, really bad day.
For more information on making sure your policy covers the true value of your assets please call our helpful team on 01743 770500 today.