Over the last year, we have seen inflation skyrocket with the Covid-19 pandemic and the Russian-Ukraine Conflict fuelling this increase.
Any significant increase in the cost of property reinstatement raises the possibility of underinsurance. Underinsurance has serious consequences. Insurers can and do reduce property claim settlements proportionately if the sum insured is less than the actual cost of reinstating and your policy wording does not adequately account for the inflationary pressures, wordings, and the presence of “Average” conditions.
Buildings are an asset that, like any other asset, should be properly protected. In the event of total destruction, a property reinstatement valuation estimates the cost of restoring the property to its original condition. It is critical to note that the market value of the property and the reinstatement valuation of the property are not related in any way.
At CMG, we have seen first hand the devastating effect underinsurance has on a business financially, with some business owners unable to reopen their doors due to the financial impact.
Our goal as insurance specialists is to help you understand what the insurance premium you are paying for covers, so that in the event of a loss, you can have peace of mind that your business can weather the financial impact.
As a business owner, the onus is on you – not your insurer or your broker – to ensure your sums insured are sufficient.
That’s why it is so important to review your policy terms thoroughly each year and undertake an accurate business valuation assessment. Estimates are not acceptable because they are based on generalisations.
A Value at Risk assessment will determine the true value of your business and its reinstatement value.
CMG’s team of insurance specialists have been carrying out Value at Risk assessments for many years and will meet with your management team to undertake an onsite inspection and a complete analysis of your business.
A formal business valuation provides multiple facts and figures regarding the actual worth or value of the business in terms of market competition, asset values and income values.
Once surveyed and recorded, the value at risk is defined based on policy cover for buildings, contents, plant and machinery, fixtures and fittings, stock, computers, and business interruption and additional costs of working.