Commercial Property Insurance – Tips to avoid under-insurance

Barrett Corp & Harrington (BCH) has kindly supplied us with some useful tips with regards to avoiding under-insurance. BCH specialise in insurance reinstatement cost assessments and risk surveys.

Under-insurance can lead to reduced claim settlements which can impact massively, in respect of future profitability and in worst case scenarios the continuation of a business. When the building is owned by a pension fund, maintaining an adequate sum insured is equally important.

The building sum insured has been based on market value

The market value is the market value.  There is absolutely no correlation between the market value and the building sum insured; never has been and never will be!   The two are often significantly different and either one can be far higher or lower than the other depending on the location and quality of the building.

The value has been based on a developers’ costs

Developers keep costs to a minimum by using their own team of consultants and contractors.  By constructing en mass, savings are achieved that would not be available in an insurance claims scenario.  We also have to take into account the additional costs of demolitions and fees.

The building is in a funny location

Not funny ha ha. We mean there’s something a bit unusual about where it is. Like in a city centre adjacent to a railway line, or on a small island that’s only accessible via a weight restricted bridge. Imagine how these factors could complicate a rebuild. Complication equals cost. Cost means higher sums insured.

The building has recently been altered

Extended, altered, refurbished. What about the sums insured?  Did they get altered at the same time?

To take the guess work out of setting your building sums insured, please contact Barrett Corp & Harrington on 0844 412 4495 or visit

For advice on commercial property insurance contact Tony Gibbs on 01189 165 485 or complete one of our enquiry forms

Author: Tony Gibbs | January 16, 2012

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