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What is under insurance?

If you have set your cover limits too low or have undervalued your assets, your cover may not adequately meet your business’ needs in the event of a claim.

Could you replace all of your IT equipment in the event of theft or loss? (Don’t assume the NHS have got it covered). Would you be fully covered for a commercial building rebuild? Have you factored in costs for outbuildings, car parks, driveways, site clearance etc.? Is your building listed (and hence more expensive to rebuild)? Has it undergone any alterations or been extended? Have you recently purchased new equipment and failed to notify your insurer? Have you thought about your drugs and vaccine inventory, especially any seasonal changes?

Why is under insurance an issue?

Most insurance policies have a clause known as The Condition of Average or The Average Clause which comes into force in the event of partial claim.

Simply put, if you haven’t paid the correct premium for your property cover, your claim will be reduced by the same percentage by which it is underinsured.

For example:

A practice has insured their contents at £200,000, when in fact they should have been insured for £400,000. The practice suffers a fire which causes damages to the sum of £100,000. When reviewing the claim, the insurer notices that the practice had underinsured their contents by 50%. The insurer is now only willing to pay the practice 50% of the claim value, leaving a shortfall of £50,000 for the practice to pick up.

9 out of 10 buildings in the UK are insured for the wrong amount1.

Due to the current climate, building costs are escalating as result of construction materials becoming more expensive than ever, hiking the price of rebuild costs2, and thereby contributing to underinsurance.

In total, it is estimated that in the UK commercial properties are currently underinsured by £340billion2 according to research by RebuildCostASSESSMENT.com.

However, the MIAB team can get a RICS approved rebuild cost assessment, which in most cases are conducted remotely, giving you and your business peace of mind that you are correctly insured.

Not just buildings

In a recent review, MIAB found that over 71% of policies they had reviewed had incorrect information which could have invalidated the cover at point of making a claim. Furthermore, over a quarter of policies showed that an element of the cover was underinsured.

This could have devastating consequences as costs are rising exponentially and no doubt will continue to rise this year.

MIAB can conduct a full review of your needs to ensure you have the correct cover for your practice, keeping their advice and suggestions simple and easy to understand. Their advice doesn’t end with your practice, as they have the knowledge and expertise to guide you through locum insurance, cyber insurance, management liability, professional indemnity as well as your personal insurances. Call them now on 01438 870725 or fill in this form to arrange a call.

1 Data derived from 14,713 Rebuild Cost Assessments completed between Sep 2020 and Aug 2021.

2 Estimate based on British Property Federation (BPF) data on UK commercial real estate

MIAB is a trading style of Lloyd & Whyte Ltd who are authorised and regulated by the Financial Conduct Authority under register number 306077.Lloyd & Whyte Ltd registered in England No. 03686765. Registered office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA