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Buildings Under-Insurance - A Note of Caution


Risk Control

Recent reliable data suggests that as many as 50% of businesses in the UK are under insured.  A significant proportion of this is buildings that are under-valued. In the event of a claim, this could have a detrimental business impact.

What does this mean?

Should a claim need to be made, a property owner will likelybe put in financial jeopardy if they don’t have adequate insurance.

What happens if I’m under insured?

The insurer will still deal with the claim however the percentage of under insurance will be deducted from the final settlement. Thus,if it were 50% under insured then half of the claim would have to be met by the policyholder.

In practical terms, how much could I lose?

It depends on the percentage but as an example if a storm damaged the roof of a building and the cost to repair it was £100,000 in this example, the policyholder would only receive £50,000 less any excess on the policy so would have to pay for the rest of the repair cost.

How do I avoid this?

There is only one certain way of having the peace of mind that 100% of the claim will be met - this is to get the property professionally valued.

Who can do this?

Only a Chartered Surveyor with an RCIS qualification can calculate the reinstatement figure which includes costs associated with a rebuild that desktop valuations cannot guarantee.

How does that protect me?

The insurer will have to guarantee the figure the surveyor produces. The policy will be amended if the figure is higher than before whichwill likely result in an extra premium cost.

How long will that evaluation last?

Normally three years after which a revaluation will berequired

How much will it cost?

It depends on the size of the property which can be assessed by the post code. For care homes we can calculate this on the number of beds but typically these start from £650 plus VAT. Listed buildings are more complex and so attract higher rates.

How can I get a survey arranged?

You could contact a chartered surveyor yourself or we can arrange one for you by contacting Jade on 01273 424904 or email;



At Quality Care Group we had a claim from a client who ran a care home. This was a listed building and the customer had insured the property for a £1 million rebuild.

Escape of water had damaged a couple of bedrooms and the cost to make good was £8000. A loss adjuster was appointed and he decided the property should have been insured for at least £2million meaning our client was 50% under insured. This cost the client £4000 of their own money.

Fortunately this claim was relatively minor in nature, but had the property been completely gutted by fire the potential loss for the client could have threatened the business itself.

Following the claim we suggested that our client have a survey carried out as the loss adjuster can only offer an opinion.

The professional opinion offered was that the property would cost £4 million to reinstate so  the client was in fact 75% under insured. We quickly made the necessary amendment to the policy and the customer was provided with peace ofmind for the next three years.

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