Too many underinsurance disasters waiting to happen
Businesses already struggling in the wake of Covid-19 face another invisible threat in the form of underinsurance.
The latest data from RebuildCostASSESSMENT.com reveals a massive shortfall in cover among UK commercial properties. The insurance valuation providers estimate that buildings occupied by businesses in Britain are underinsured by a whopping £325 billion.
“What this means is hotels, shops, factories, warehouses and many other types of commercial buildings across the country are woefully under-protected in the event of any kind of damage,” said James Scott-Brown, director at Rebuild Cost Assessment Ltd.
“With businesses already struggling financially, many simply would not currently survive the consequences of underinsurance, which unfortunately many property owners and small firms in particular are unaware of.”
James went on to explain that nine out of 10 properties in the UK are insured for the wrong amount. The vast majority (79%) are underinsured, which means that when a claim is made, the amount paid out to cover the damage can be severely reduced.
“We’ve recently seen with the situation around business interruption cover that insurance contracts can lead to confusion. Underinsurance often leads to disputes with insurers and in severe cases may even put firms out of business. On average, we find that buildings are only covered for 69% of the amount they should be, leading to a considerable shortfall in cover.”
It’s not only businesses that suffer. RebuildCostASSESSMENT.com estimates that the owners of as many 580,000 homes in the UK worth more than £1m each are also significantly underinsured.
“Now is not the time for anyone to discover their insurance policy won’t pay out the amount they’re expecting. This is a UK wide problem and it can only be resolved by people and businesses being guided correctly, realising the risk they’re running and making sure their buildings are insured for the right amount.”
RebuildCostASSESSMENT.com has produced an infographic highlighting its latest data around inaccurate buildings insurance, based on more than 11,000 property assessments over the past 12 months. A pdf version of this infographic can be downloaded here.