We’re going to cut straight to the chase. Underinsurance is a pretty serious problem and the more policies we review – the more we see it. If you are underinsured, insurers will and can refuse to pay the full value of your claim.
A simple illustration of this is, you’ve insured your building for £150,000, there is a fire which destroys the whole property. You then discover the cost to rebuild it is actually £300,000. Yep, down by £150,000, that’s 50% of what it should’ve been insured for!
Now imagine if this actually happened…
The Insurers Average Rule
If you read the Terms and Conditions in your insurance policy you would find a condition that insurers call the ‘average’ rule. If your property is under insured, most insurers will apply this when they calculate claims.
This means whatever amount you are under insured for, they can and will reduce the amount you are due to be paid by the same percentage in the example above this would be 50%!
Let’s look at how this would work in reality; the building is insured for £150,000 but it should be insured for £300,000, you are underinsured by 50%. You have a claim for £50,000 but because you were underinsured by 50% the insurer only pays you 50% of the claim which is £25,000, leaving a deficit of £25,000 – Yikes.
We’ve witnessed landlords and property owners suffer devastating blows due to underinsurance. Insurers don’t care if its just an honest mistake – they expect you to know what your property should be insured for.
The team at Glowsure want to make sure your property is fully protected.
For every new client that places a new commercial property insurance policy (buy to lets, blocks of flats, commercial properties) with us between now and the end of June 2020, we will pay for a desktop rebuild cost assessment on the property, usually £160 per property.
You’ll receive a comprehensive RICS regulated report telling you how much you should insure your property for.
For a full outline of Glowsure’s RCA Offer and Terms & Conditions, click here.