Underinsurance remains one of the most persistent and costly risks in both personal and commercial insurance, yet it often goes unnoticed.
Regularly reviewing and updating the amount of insurance cover for buildings, plant & machinery and home & contents is essential to ensure you’re financially protected.
Your insurance sum insureds should be checked each renewal to take into account alterations or purchases during the last year, also impact of inflation, including higher building materials, labour and import costs.
What happens if the insurance sum insured is not enough to rebuild or replace?
Most insurance policies require the sum insured (declared value) to be the current cost of replacing the building, machinery or content. Not having enough cover to rebuild, undertake major repairs or buy new machinery or contents can cause claim settlement major delays, as well as have serious financial consequences.
For example, if a factory is badly damage and is insured for $700,000, however the cost to rebuild after it’s destroyed is quoted at $1 Million. This will immediately result to a substantial shortfall, which the business will have to fund.
Insurance policies also have an underinsurance (also known as an Average) clause, which could further lead to a reduction in the final claim settlement amount, when you’re trying to focus on rebuilding your business.
Commercial Buildings & Machinery Valuations
It’s recommended that professional valuations for commercial buildings and plant & machinery be obtained from licenced specialists every couple of years, to ensure you have the right amount of cover.
Insurance Advisernet have agreed discounted rates for clients from the following licenced valuers:
- MCG Quantity Surveyors – specialising in property valuations
- Andrew Nock valuers – Buildings, Site Improvements, Plant, Equipment, Mobile Plant, Contents, Fine Arts, and Antiques.
Online free Home & Contents calculators
We recommend using a free online calculator to check the amount of insurance cover for your home and contents. There are free calculators from insurers and banks, as well as from The Insurance Council of Australia.
Keeping your cover current
As the cost to replace and repair buildings, machinery or contents is increasing, so should the amount of your insurance sum insured. Talk to your insurance adviser about getting professional advice including contacting licenced valuers.
Contact Lewis Insurance Services on 07 3217 9015 or send us an email by clicking here.
This article was published by our AFSL Licensee, Insurance Advisernet Australia P/L, www.insuranceadviser.net
Disclaimer:
This information and any accompanying material does not consider your personal circumstances as it is of a general nature only. You should not act on the information provided without first obtaining professional financial advice specific to your circumstances and considering the Product Disclosure Statement