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Underinsurance: When was the last time your rebuild sum was reviewed?

With insurance you have the peace of mind that if the worst happens, your loss can be recovered.

However, this assurance is fully dependent on having the right level of insurance for your claim. If you suffer damage to part of your building or the entire property, you’ll need a policy that will fully reinstate or rebuild your property/ies.

‘Condition of Average’ clause

Due to the ‘Condition of Average’ clause that insurers add to policies, your property may be at risk of underinsurance which can result in severe financial loss. It means that if you insured your building for an amount that’s less that it’s true rebuild value, your insurer can reduce how much they’ll pay out by the same proportion you're underinsured.

Here's an example:

How do properties become underinsured?

There are a number of reasons that can lead to your property becoming underinsured, such as:

  • Property prices and the cost of building materials at an all-time high
  • A historical figure that has always been on the insurance documents
  • The building has been improved, updated, or extended
  • The amount has been based on the costs of a developer

As you can see, it’s easy to fall foul to underinsurance, which is why it’s essential to ensure that you have taken every step to protect your asset in full.

How we can help protect you against underinsurance

To make sure you’re not underinsured, we recommend that you get an updated valuation of your property(ies). Not only does this give you peace of mind that you’ll have the right level of protection in place, you’ll also have the correct information to evidence proof of loss, should there be any damage to your property.

We have a long-term partnership with independent appraiser, Sedgwick, who are able to offer our clients the services of their fully qualified valuation surveyors at preferential rates.

If you’d like more information about under-insurance and would like to receive a quote to get a valuation on your own particular property(ies), please contact your usual Sutton Winson team or call 0330 008 5555.

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Categories: Commercial Insurance, Risk Management

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