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Under Insurance

Under Insurance

Under Insurance – If you don’t know what it is, your business is massively exposed...


Firstly, let me take this opportunity to explain what under insurance and the ‘Condition of Average’ clause are. A restaurant values its contents at £100,000, there is a claim and it comes to light that the actual value of the contents is £200,000. The client has under estimated the amount by 50%. Because of this any insurance pay-out will be reduced by the same percentage (in this case the amount will be halved).


Clearly in a total loss this would be catastrophic for any business and would go some way to explain why 70% of businesses never reopen after a fire. One of the reasons for this issue is a lack of involvement from the customers broker. At each renewal the sums insured should be reviewed and altered accordingly. If this is left a year or two, although potentially costly and dangerous, starts to pail into insignificance if the customer has been with the same broker for many years and not had a holistic review carried out. A kitchen bought and fitted 10 years ago is going to cost substantially more if the same purchase is repeated today.  


An alarming statistic from the Building Cost Information Service stated that 80% of commercial properties were underinsured. If you have not reviewed your sums insured within the last 2 years call us on 0121 439 2929 for a no-obligation overview of your insurance needs.


Paul Woodford


Coversure Insurance Services (Harborne) Ltd

0121 439 2929 | www.coversure-harborne.co.uk


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The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal or accounting advice and should not be relied upon as advice. Please see our website's terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact us and one of our accountants will be happy and able to advise you on your own particular circumstances.

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