Provided by RS Risk Solutions Ltd
Almost half of commercial properties are underinsured
It is estimated that almost half (46%) of commercial properties in the UK are underinsured, leaving countless businesses at risk of out of pocket costs. The average insurance shortfall is approximately 40%. Such a deficit could leave businesses having to cover a significant portion of the costs to repair or rebuild their commercial properties in the event of a loss. Underinsurance increases financial risk and could lead to lengthier business interruptions.
Factors impacting underinsurance
A survey found that several factors influence the current underinsurance prevalence. Half (50%) of claims managers blame increased labour costs, and 6 in 10 (63%) blame the rising cost of materials. In fact, the cost of building materials has increased by 38% since 2020, according to data from the governments department for business and trade. Supply chain disruptions and worker shortages have compounded these two issues. Additionally, more than a third (37%) of claims managers reported that property owners don’t conduct regular property valuation, exacerbating the problem.
Strategies to Avoid Underinsurance
Business’s should review their insurance policies to ensure they have sufficient cover to defend against disaster and consider the following tips:
- Conduct regular, accurate valuations of your business, property and contents. Consider having a professional assist you in the valuation process.
- Provide the cost of rebuilding your business property to your insurer rather than the market value or the amount you purchased it for.
- Determine an appropriate indemnity period that allows your business sufficient time to recover after a loss event.
- Increase your sum insured to reflect inflation.
- Review your policy wording to ensure you have the broadest cover possible. Update your policy whenever you make business changes.
Contact us today to review your insurance cover and ensure robust protection.
