A survey carried out by Market Bosworth based specialist insurance valuers, Barrett Corp & Harrington Ltd, has found that 96% of commercial buildings in the East Midlands have unsuitable levels of property insurance. To compound the problem, an average 73% rise in the existing sum insured is necessary to establish the correct level of commercial property insurance in place.
The survey took five years to complete, running from just prior to the 2007 recession up until this year, and found that the problem is spread across the East Midlands area. Some of the properties that were evaluated in this time for suitable commercial property insurance included shops and restaurants, hotels, factories and storage facilities.
Local risk management and independent insurance brokers, Russell Scanlan, partly attribute this problem to the recession. They say that inadequate property insurance puts many businesses in a potentially damaging situation should they ever need to make a claim.
Mike Dickinson from Russell Scanlan went on to say: “Times are tough, and many people believe that because of the sluggish economy, their property is unlikely to have gone up in value. That’s actually not the issue as insurance policies are concerned with the re-building cost of the property rather than the market value which can, in many cases, be very different figures.
“We’ve dealt with a number of cases recently where firms in the East Midlands have been prejudiced when they have had a claim because their commercial property insurance cover falls well short of the mark. It’s important that we highlight this issue to help other businesses avoid the same fate.
“Yes, an insurance review may, in the short term, lead to a slight increase in premium and the need for a professional valuation. But that’s a small price to pay in the long term. We believe it’s simply not worth businesses taking that risk in this difficult climate.”
Barrett Corp & Harrington Ltd also found that the problem was commonplace during their regular business of carrying out property insurance valuations. Roger Corp, Director at Barrett Corp & Harrington Ltd, says: “Underinsurance is a major issue in the UK. The degree of underinsurance highlighted by our statistics can, unfortunately, lead to financial disaster for a business – impacting on shareholders, directors, employees, their families, suppliers and other contacts.
“By regularly reviewing the value of their property assets, businesses will be far better placed to manage the risks and ensure they are adequately protected if the worst were to happen.”