How Much Is Enough ? Peter Millington ACII Director Nasty Stuff In - PDF document

23/09/2014 How Much Is Enough ? Peter Millington ACII Director Nasty Stuff In Insurance Policies � Claims Conditions � Endorsements, conditions and WARRANTIES � Average (Underinsurance) Is there An Underinsurance Problem ? � Royal Institute of Chartered Surveyors - up to 80% of Commercial Buildings are probably underinsured � Chartered Institute of Loss Adjustors - 40% of Business Interruption Policies are underinsured with the average shortfall being 45% � Building Cost Information Service – 1 in 4 homes are underinsured � Association of British Insurers – UK Insurers paid out £5.8 million to business for property damage claims every day in 2006 1

23/09/2014 So What Is The Problem ? “If at the time of damage the sum insured for any item is less than the value of the item covered by such sum insured , the amount payable by the Insurer will be proportionately reduced” A Calculation Sum Insured Claim x Loss = Sum True Value at Risk Paid £500,000 x £20,000 = £10,000 £1,000,000 The Business � Gross Profit Definition � Turnover less : � Purchases � Packaging � Transport � Adequate Indemnity Period 2

23/09/2014 Considerations Buildings / Contents / Stock Business Interruption � � Age of Building Are all businesses included � � Definition of a Building Are all activities included � � Listed Status Correct Gross Profit definition � � Materials How long to rebuild � � Applicable Building Regulations How long to replace machinery & � stock Location � How to long to build the business � Debris Removal Costs & back up to levels enjoyed just Professional Fees before the damage � VAT � Anticipated growth of business in � Reinstatement or Indemnity the years to come � Cost of Stock � Any key customers or suppliers � Seasonal Trading Tips 1. Create an asset register : a. Include serial numbers of business equipment b. Show replacement costs as new and as second hand c. Keep a copy off site 2. Take photographs and videos of buildings, machinery, equipment, stock : a. Keep a copy off site 3. Have your Commercial Buildings Professionally valued for their rebuild cost every three years 4. Review your own home buildings sum insured adequacy for free at http://calculator.bcis.co.uk/calculator/calculator.aspx 5. Keep your insurance broker updated with any changes Questions Sentinel Corporate Risk 7 Camden Place Preston Lancashire PR1 3 JL Tel 01772 789455 Fax 01772 789465 www.sentinelrisk.co.uk 3