Why is it even a thing?
One thing that I have been concerned about, for all of the 30 years that I have helped people insure properties and businesses, is the lack of knowledge about how much they should be insured for. This leads to issues with claims because insurers expect policyholders to know how much cover they need to rebuild their asset. Sometimes it seems prudent to over insure at an arbitrary limit. Yet that might not prove cost effective if a property is to be insured for long periods. Which they are, especially homes.
Research shows that 80% of homes are only insured for a fraction of the cost that they should be. RICS determined it was as high as 90%, even after the arbitrary limits had been taken into account. I had a full survey carried out at home 3 years ago yet found that my home was underinsured… we update our cover and keep an eye on it due just in case there are rising costs, for example, if building materials and labour costs increase due to Brexit.
How do we know this is a real issue?
It is just as difficult with commercial properties. Research carried out by The Building Cost Information Service found that 61% of properties are not insured for the correct amount. Indeed, 758 properties were physically surveyed and results revealed that they should have been covered for £705 million (in total) – they were only covered for £427 million.
The people that lose out when this happens are the owners of the properties because most insurers rely on small print to encourage buyers to get it right. If the buyer gets it wrong, which is rarely intentional, the amount paid for a claim can be reduced.
Why does this happen?
Not everyone has spare cash when investing in property. Others are unaware that the insurance valuations are out of date. Either way, it would cost money, with property owners forking out £500 (or thousands for commercial properties) to retrieve a report from a surveyor.
So we have found services to ensure that the gap can be bridged.
- A property insurance that includes a survey and/or doesn’t have the horrible clause that penalises under insurance
- A calculator for interruption* to businesses which factors in the cost of cyber risks to a business.
- An online resource for calculating the cost of rebuilding a residential property
*Naturally, if you have already arranged your business insurance with us, we have already done this for you.
In true Cobine Carmelson fashion, we have used our negotiating skills to secure a discount on the latter for our clients and friends because it affects (nearly) all of us.
The links are here: