A guest blog by Towergate Insurance: corporate members of the Charity Retail Association
As a Corporate Member of the Charity Retail Association, we pride ourselves on being more than just an insurance provider to the charity and not-for-profit sector. This is why we can also provide guidance and support on other areas of risk management. This blog specifically looks more at underinsurance, and why it is so important not to leave yourself exposed, especially as a charity.
Underinsurance – why be concerned?
According to our partner CPA, who provide surveying services for both reinstatement costs and business interruption, 50 per cent or more of buildings they survey are underinsured – i.e. the level of cover is insufficient to meet the cost of rebuilding the property in the event of considerable damage, for example by fire.
Policies are normally subject to what is called Average – which effectively reduces a claim settlement in proportion to the level of underinsurance. For example, if your building is insured for £500,000, but should be insured for £1m, you are 50 per cent underinsured. This means that if you have a claim, it is likely you will only receive 50 per cent of the amount of the claim.
If you own buildings, they are often your single most valuable asset and if your cover is not adequate to meet the costs of repairing damage suffered, this could jeopardise your business and in the case of a charity, seriously impact your ability to continue. This is why, as a specialist insurance broker for charities, we recommend you get a Reinstatement Cost Assessment (RCA) carried out at least every three years.
For the same reasons that it is important to avoid underinsurance of buildings, it is vital to the financial health of your business that there is appropriate and adequate Business Interruption cover in place. It is not uncommon for businesses to have no or reduced income for periods of many months following damage, imposing immediate and severe strain on cash flow and financial resources. At this time, your outgoings are likely to remain the same, regardless of whether your earnings are coming in. Business Interruption cover provides the much needed support during the initial period whilst repairs and replacements can take place, will assist with the increased costs of working that can arise and can help meet any ongoing impact until things go back to normal.
As a specialist insurance broker to the charity and not-for-profit sector, we understand that our relationship with you should be more than just about insurance. Therefore, speak to us today about the value-added services we can arrange for you, as well as more detail on our specialist charity policy.
You can contact our specialist charity advisors on 01438 739 741 or via email: firstname.lastname@example.org.
Please be aware that Valuation Service Providers are not authorised or regulated by the Financial Conduct Authority. Towergate Insurance is a trading name of Towergate Underwriting Group Limited, authorised and regulated by the Financial Conduct Authority.