Flat-Living.co.uk Insurance
“It will never
happen to me”
In excess of 77% of all the cases Barrett Corp and Harrington (BCH)
handle, involving billions of pounds worth of property, are found to be
underinsured.
he reasons for underinsurance damage, the amount that would otherwise Residential Management
T
are many and varied but often have been paid is in proportion to the degree Company to be sued by other
the origin of the sum insured is of underinsurance. leaseholders as no formal
totally unknown. Some rely on An example is as follows: insurance valuation had ever
inappropriate advice, rules of 1. Block of 10 flats Insured for been conducted.
thumb, the market value or take the view ‘it £1,000,000; 6. In addition and despite
will never happen to me’. Sometimes there 2. Development should have been the financial penalty, which can
is simply a failure to update a previous insured for £1,500,000; be devastating, underinsurance
valuation. 3. Major loss occurs to the value of can lead to disputes, protracted
BCH has also dealt with cases where the £600,000; discussions and of course delay
client has been reluctant to have the building 4. Due to underinsurance, insurers in reinstating the building. Any
valued fearing an increase in premium, invoke the Condition of Average additional costs resulting from
not appreciating that any increase will be and pay only 66.67% of the loss such delay will not be covered
insignificant compared to the impact of i.e. £400,000. Leaseholders have by the insurance policy.
underinsurance in the event of a claim. to find £20,000 each in order for UK fire losses are at record levels and there
Many insurance policies are subject to the flats to be made habitable is now greater potential for total losses than in
the Condition of Average, which means that again; the past, and, consequently, greater potential
in the event of underinsurance and partial 5. Potential for Directors of to test the adequacy of sums insured.
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