A growing number of property owners are under insuring their buildings, according to analysis by Cadogan Keelan Westall.
The property broker found although commercial property insurance premiums are stable, the amount most property owners need to insure is on the increase, as commercial property values and rebuild costs rise.
Property owners are at risk of incurring huge costs in the event of a rebuild if they are under-insured, as their insurance may not cover the rebuilding cost, demolition and site clearance, together with the related professional fees in the rebuilding process.
Research shows a rise in under-insured properties, as owners fail to update and review declared values on a regular basis.
Jonathan Hackett, client development director at Cadogan Keelan Westall explained: “We are seeing a growth in under-insurance as the recession continues to bite, because many property owners are failing to have regular valuations.
“A recent case highlights the growing problem of under-insurance that we are seeing. A property owner had to make a claim on a listed block of flats following fire damage and it was found that whilst the value at risk was £215 495, the value declared for the policy term was £142 000. This represents an under insurance figure of 65%.
“Under-insurance is one of the biggest factors to claim settlements being reduced.”
Source: Post Online