Twelve Reasons for Incorrect Sums Insured


An analysis of recent assignments suggests that about 90% of Buildings and 80% of Plant & Machinery are under-insured. Here are some of the most common reasons that businesses get their sums insured wrong:

  1. The insured values are based on market value not actual reinstatement costs
  2. The assets have not been professionally valued for insurance purposes in the last three years
  3. The insured values do not allow for recent change in the cost of labour and raw materials
  4. Changes in technology may enable replacement with cheaper modern materials
  5. The insured values do not take into account professional fees and debris removal
  6. The buildings are listed or of an unusual construction
  7. There have been major refurbishments, modifications or additions
  8. The insured values are based on out-of-date asset registers
  9. The insured values do not allow for fluctuations in exchange rates
  10. The insured values have been calculated using incorrect indices or non- specific indices
  11. Indexation has incorporated equipment bought second hand which may not reflect the true cost of replacement in the event of a loss
  12. Recent demolition work has not been taken into account

If you are not entirely confident that you have used the correct methodology or obtained professional advice to arrive at their sums insured, you may not be able to arrange effective insurance cover and may be liable for any shortfall in the event of an under-insured loss.

A professional valuation will give you reassurance that you business is adequately protected in the event of a serious claim.

Ask now for a quotation with no obligation.

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