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Brokers, insurance companies and property agents agree that underinsurance is a recurrent problem and an enormous risk for their clients. Nevertheless, underinsurance has increased since the start of the recession in 2008 and could well affect the state of commercial underinsurance today confirms commercial property agent Prop-Search.
The Building Cost Information Service conducted a report in 2012 which revealed that 80% of commercial properties were underinsured. Savvy clients would agree that this is a false economy and the proof comes if and when the underinsured makes a claim against their policy.
The reason for underinsurance is often more complex; more to do with confusion and error, than reasoned avoidance, with sums insured consistently lagging behind valuations by at least 20%. A recent article in Insurance Times says many clients tend to reply on market value rather than reinstatement/replacement cost for material damage affecting buildings, machinery and plant.
Simon Toseland, a Director of Prop-Search says, "To ensure that all restorative costs are covered in the event of a claim, regular valuations are vital.”
"We tend to hope for the best but should always plan for the worst. We hope that it will never happen to us, but sadly, occasionally, it does. Fire, flood and other disasters can and will occur, and if property is not re-valued regularly, there is bound to be a shortfall to rebuild or reinstate any building to its former glory. And that shortfall will be the responsibility of the underinsured party.”
"Many building owners and landlords overlook the risk of underinsurance and feel a false sense of security when they renew their policy. Others surmise that if they have the property re-valued it will increase the premium - which is often a truism, but perhaps better to pay a small hike in premium than be faced with a much larger rebuild invoice."
Building costs and demand for materials and labour continue to increase post-recession. Regulations are also putting pressure on costs, with stricter approaches by local authorities for cleaning up after an event, as well as more demanding building regulations on new built projects - particularly Part L, the energy efficiency requirements for insulation and thermal dynamics.
Prop-Manage – the commercial property management arm of Prop-Search, is delighted to confirm a new commercial property insurance service through Prop-Insurance.
In association with insurance broker Wentworth Alexander Limited, a special facility has been negotiated with ‘A’ rated insurers to offer preferential premiums and policies to all Prop-Search and Prop-Manage clients. Prop-Insurance will cater for all commercial property insurance requirements even if a property is unoccupied. Significant premium savings and improved insurance cover could be available.
Further information or advice can be obtained from Prop-Search - Tel: 01933 223300 / 01604 492000 or its website: www.prop-search.com