Page 15 - AVRO News Issue 1 March

Underinsurance threat to a

business

Underinsurance threat to businesses

Failing to correctly assess the value of property for insurance purposes can have serious consequences in
the event of a claim. That’s because most property insurance policies contain an ‘average’ clause. These
clauses mean that even a relatively modest claim may be reduced in proportion to the extent of any under-
insurance. In the event of a catastrophic claim, a firm could quite possibly be put out of business.

To check your re-building cost sum insured is adequate:

- calculate the total floor area in square metres and divide the resultant area into the sum insured to give
you a current sum insured per square metre

- Look up market rebuilding rates using the on-line Building Cost Information Service (BCIS) for the type
of construction used in your buildings and see how that compares with the current sum insured per square
metre

- Add to the figure arrived at using the BCIS a suitable allowance for the following:

§ VAT (if you are not VAT registered)

§ Provision for site clearance costs (following a devastating fire)

§ Professional fees (solicitors, architects)

§ An allowance to cater for local authority and EU requirements (which may stipulate mandatory
improvements to what was previously in place)

§ Planning and building regulation fees

§ Concrete or similar hard standing areas, external walls, gates and fences, minor outbuildings, drainage
and public utilities

On-line calculators should only be regarded as a guide to rebuilding costs; their use does not guarantee
that your insurance company will regard your sum insured as adequate in the event of a claim. If you are in
any doubt about the data available through the BCIS resource, opt for a professional valuation.
If your current building sums insured are too low, immediately arrange for them to be increased to a
suitable level. Don’t wait until your policy is next due for renewal.
Whether you need simply help with finding a valuation expert, or whether you would like a complete motor
trade insurance quote, Towergate can help. To find out more, call Towergate Insurance today:

0344 346 0917

“
Testimonial from A1 Recovery

We at A1 Recovery were delighted with the motor trade insurance quote that we received
from Towergate’s Specialist Motor division and moved our business to them straight away.
Since appointing Towergate, we are very pleased to say their service has more than lived up
to expectations. We would encourage every AVRO Member to get a quote from Towergate’s
Specialist Motor team.

Mike Eames, Managing Director, A1 Recovery “
AVRO NEWS 15