NOT A PENNY MORE
Balance your insurance policy sums...
It’s unlikely that reviewing the sums-insured on your insurance policy was top of the list for new year’s resolutions, but perhaps it should be!
It is likely that if you haven’t reviewed your sums insured for a while, you may find that you are under insured, in fact data shows that up to 83% of properties are underinsured and on average they’re only insured for 66% of what they should be!
A greater proportion of properties are now underinsured and the gap between property rebuild costs and the amount buildings are currently insured for in the UK is widening.
Latest research shows 83% of properties were found to be underinsured, up from 80% in 2021. On average, these buildings were insured for just 66% of what they should have been. The percentage last year was 68%, which shows how the buildings under-insurance gap is widening in the UK. This gap is biggest among buildings insured for up to £500,000, which are on average only covered for 51% of their rebuild cost.
Buildings insured for more than £2 million are closer to what they should be, but still only covered on average for 70% of reliable rebuild cost. But what is the effect of underinsurance? Well in the unfortunate event where you have an incident on your park where you need to make a claim, if you are found to be underinsured then your claim settlement may be reduced proportionally in line with the level of underinsurance.
This can happen if the reinstatement cost of the property is not adequately valued at the time the insurance policy is taken out, or if the reinstatement cost of the property increases over time and the policy is not updated to reflect this change. Common increases can include refurbishment of premises, additional buildings and increasing cost of materials to reinstate buildings.
Insurance policies are often index-linked which means the insurer will increase sums insured at renewal by a set percentage to take into account inflationary pressures, however if the initial sum insured is incorrect then all this does is prevent an underinsurance issue from getting worse.
The other point to bear in mind is that your insurance policy will contain a ‘buildings definition’ and any reinstatement building sum insured needs to take into account that definition. A standard building definition will take into account roads and paths and underground infrastructure and if this isn’t reflected in your building sum insured or catered for separately, as it is under the Park Protect Insurance policy, then you may find that you are underinsured in the event of an insured loss.
The onus is on the policyholder to ensure that these sums are correct, so how can you avoid this potentially costly issue? A professional valuation can help ensure that your holiday park is adequately insured. It is important to have an accurate valuation of your property and assets in order to determine the appropriate amount of insurance cover. The value of your property and assets may change over time, so it is important to review your insurance cover regularly to ensure that it remains adequate. Conversely, research shows overinsurance can also be an issue.
Research shows that 13% of buildings assessed were covered for too much this year, on average by 132%. So having a professional valuation could actually save you money. A specialist insurance broker can help you assess your insurance needs and find a policy that meets your specific requirements. They can also help you understand the terms and conditions of your policy and ensure that you are adequately covered. Park Protect provides tailor-made insurance for the specific needs of your business. Get in touch to find out more.
Tel. 01422 358 525