March/April Issue 60 - Flipbook - Page 33
HOWDENS
BACK TO BASICS: WHAT IS UNDERINSURANCE?
In the insurance world, there
are certain words and phrases
you don’t mind hearing when, as
a client, you need to submit or
chase up a claim, such as “Your
claim has been successful” or
“Your claim has been paid.” Both
of which suggest all was well with
cover, which takes away some of
the sting and anxiety of having to
make a claim in the 昀椀rst place.
But what if your 昀椀rst communication
after property theft or damage,
or a case accident, is something
along the lines of “It seems you
were underinsured”. That’s never
the start of good news.
In upcoming blogs, we’ll be
revisiting and updating what are the
consequences of underinsurance
for various areas like property,
business, and contents, while
also answering some of your most
common queries on some newer,
but completely related topics.
But 昀椀rst of all, here’s an essential
de昀椀nition and some initial advice
on how to avoid hearing or reading
that horrible line.
Underinsurance is not taking out
insurance to the right level. Or put
another way, taking out insurance
at a level that’s simply not enough
to cover what you wanted it to.
So, if for example there was a
昀椀re at your business premises,
without the right level of insurance
cover prior to the incident, it’s
unlikely that you’ll get anywhere
near the pay-out required. You
have no building, most of your
stock is destroyed or damaged,
and you still need to pay staff and
suppliers. That’s not just a 昀椀re,
that’s probably the end of your
business.
In monetary terms we can explain
it this way. If you take out buildings
insurance for your business for
£500,000, but the real rebuild
cost is closer to £1,000,000, in
the event of a 昀椀re, you’ll not only
be dealing with the anxiety of the
burglary, but your claim may also
be null and void.
And here’s the thing… even if
you were to put in a claim for
say £100,000 – much less than
the value – you’re still in trouble
as you won’t have been paying
the right amount of premium and
therefore insurers will adjust your
claim accordingly.
Discover more about how
underinsurance
affects
property and how Howden can
help here.
This applies across the insurance
spectrum, whether it’s for a house,
motor 昀氀eet, or multinational
corporation.
So, to avoid underinsurance
– make sure your sums and
indemnity periods at the outset
add up and you’ve been advised
correctly by an insurance specialist
on the right level of premium and
cover.
in the 昀椀rst place. There is another
common factor – reliance on
outdated valuations.
But rather than just pointing out the
scary stuff, our risk management
packages are all about having
contingency plans in place for
every event and circumstance.
And that includes working with
you to establish the correct levels
of insurance cover, whether this
is helping you understand your
true rebuild cost on your buildings
or correct reinstatement value on
your plant and machinery or the
right indemnity period under your
business interruption insurance
cover.
At Howden, we believe that your
insurance cover should provide
you with certainty of outcome
and we’re here to ensure that this
happens.
We’ll return shortly to the broader
topic of underinsurance in the next
few weeks (including unmissable
insight and interviews with some of
our insurance experts), but if you
have any concerns or questions
regarding your current cover, talk
to our specialist, Russell Winch at
russell.winch@howdeninsurance.
co.uk or click here to request a
quote.
At Howden, we understand that
underinsurance happens a lot –
even with the savviest of CEO’s
and ops directors at the decisionmaking helm. This is often down
to a combination of confusion as
to what is supposed to be included
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