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INSURANCE


Will your cover your


andwiththe advent of theusualwinter related claims,many property owners will be looking to claim the repair or reinstatement cost fromtheirinsurance company. Most claims will be relatively minor and


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settled quicklyinthishighlydrivenservice marketwithout insurers questioning the adequacyofthe suminsured.However,larger claimswillbesubject to closescrutinyand a proportion will be foundtobesignificantly underinsured,resulting in asignificant shortfallintheamount paid by theinsurance company. Of allthe valuations conductedbyBarrett


Corp&HarringtonLtd,involving billions of pounds worthofproperty, morethan 75%are found to be underinsured. The reasons aremany and varied


but often the origin of the sum insuredistotally unknown. Some rely on inappropriate advice, rulesofthumbor marketvalue or just take theview‘it will never happen tome’. Sometimes there is simply afailure to update aprevious valuationorthe fear that if the building is


DuRing 2011, as reported in the press,there have beensomevery seriousfiresinblocksofflatsinthe UK. Following the recent storms


Don’tforgettoregularlycheck that your sum insured is adequate to covermajor damage to your block, warns RogeRCoRp


valued andthere is an increase,there will also be an increase in the premium. In fact, anypremiumincrease will be insignificant compared to the potential financial impact of underinsurance in theevent ofamajor claim. Although very comprehensive in their


cover,most insurancepoliciesthatdealwith blocks of flats aresubject to theCondition


Most claimswill be relativelyminor and settledquickly


In addition to the financialpenalty, whichcan be devastating,


under-insurance can also lead to disputes


CLAIM Costs?


of Average,whichmeans that in theevent of underinsurance andpartial damage,the amount paid will be in proportion to the degree of underinsurance (see example in box). In additiontothe financial penalty,which


canbedevastating,underinsurancecan also lead to disputes,protracteddiscussions andof course delayinreinstating thebuilding.Any additionalcostsresultingfrom such delaywill not be covered by the insurance policy. Although there is the potential forRMC/


RTMCodirectors andmanagingagentstobe sued forfailing to arrangeaproper insurance valuationand failing to arrangeadequate cover, this is likelytoofferlittlecomfort in the immediateaftermath ofamajor fireorserious damage to your property.●


RogerCorpisaDirectorwithinsurance reinstatement cost specialistsBarrett Corp&Harrington Ltd Tel 0844 412 4495 email roger@bch.uk.com


AREyoUUNdERINSUREd?


nAblock of 15 flats is insuredfor £2,000,000.


nThe development should have been insured for £3,000,000.


nMajor loss occurs to the value of £600,000. nDue to under-insurance, insurers


invoke theConditionofAverage andpay only twothirds of thelossi.e.£400,000; resulting in a shortfall of £200,000. Leaseholders have to find £13,333 each in order for the repairs to commence.


Don’t forget that if there is a total loss, the policy will only pay up to the suminsured,resulting in an even larger shortfall.


Flat Living Winter 2011


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