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10 TOP TIPS 3
If the amount of insurance cover you take out doesn’t match the amount needed to get your business back up and running after making a claim – for example following a fire or flood – then you are ‘underinsured’. This means the amount paid out won’t cover the full cost of repairs or replacement, leaving the business to make up the shortfall, something it is not always possible to do.
The insurance needs to be sufficient to cover not only any damaged items, rebuilding or renovation work, but also business interruption costs that may be incurred. So what are the areas to watch out for?
1
INSURED FOR MARKET VALUE OR REBUILD COSTS?
Although the market value of your property may give you confidence if you have to make a claim – especially if it’s gone up in value since you purchased it – the insurance cover should be based on what it would cost to rebuild your property, which is often a higher amount.
2
PROFESSIONAL VALUATION You should have your property
professionally valued for insurance purposes every three years to ensure that any significant changes can be identified and included in your premiums.
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The weather has been wreaking havoc in recent weeks and the resultant flooding provides just one example of the sort of event that can mean calling up your insurance company to make a claim. James Shaw, of insurance broker Darwin Clayton, highlights the 10 areas where you may be at risk of insufficient cover.
ALTERATIONS AND EXTENSIONS Any alterations or extensions to
the property are likely to affect its value and therefore your insurer/broker should be made aware.
IS YOUR PROPERTY A LISTED BUILDING?
Listed buildings usually take longer and are more expensive to repair or rebuild than standard buildings. This could make a marked difference to the amount of time your business is out of action and the resultant cover required.
ACCESS AND CLEARANCE As well as the building itself, any
rubble or debris will need to be cleared which may require heavy machinery. Access issues could also add to the time that works take and affect your business interruption cover.
6
NEW PLANT OR EQUIPMENT If you purchase new stock or
equipment you should inform your insurer/broker. Otherwise your machinery and business interruption cover may be insufficient.
7
STOCK LEVELS If your business is growing, you
may have more stock than when you took out your insurance policy or it was last reviewed. Increased value of stock needs to be taken into consideration.
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PROFESSIONAL FEES For rebuilds or major renovations
you are likely to require the services of an architect or surveyor. Their fees will need to come from your insurance pay out.
9
VAT STATUS Your VAT status affects your
insurance pay out as insurers will normally pay the policy holder compensation exclusive of VAT.
10
OUTDOOR ITEMS The cost of gates, fences,
car parking areas and the like need to be built in to your insurance assessment.
WHAT SHOULD I DO? Always let your broker or insurer know about any changes affecting your business, whether to the building, surroundings or contents. They can help you understand whether your cover is sufficient for your needs and the professional help that is available. If the worst happens, the last thing you want is to find out you’re not properly covered.
www.darwinclayton.co.uk
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