If you’re a busy business owner, you probably don’t have much time to spend thinking about insurance.
Talking about insurance can be as boring as watching paint dry – yet making sure the ‘sum insured’ on your building is correct is important.
What exactly do you mean by building ‘sum insured’?
Sum insured refers to the maximum amount of money an insurance provider will pay if you make a claim.
The most an insurer pays can include carpets, fixtures and services to the building.
Watch the video on building sums insured below:
How you can get yourself into a pickle when it comes to sum insured
However, it’s important to realise that if you don’t know the correct replacement value of the building then you could be underinsured.
What if my building is worth more but I don’t want to pay more in premium?
With commercial buildings there is normally an ‘under-insurance’ clause written into the policy.
This clause means an insurance company can choose not to pay you the full amount if the sum insured you agreed to isn’t close to the full rebuild cost.
Think of it like ‘sharing’ the insurance risk with your insurance company.
Just imagine this – part of your building burns down. You were only insured for $500,000 yet to rebuild the whole building it’ll cost $1 million.
Effectively you have ‘shared’ the risk with the insurer and the insurer is entitled to pay you around $156,000, leaving you out of pocket $94,000.
Now can you see why it’s worth taking notice of the sums insured on your policy?
Whether you own a residential or commercial property, having adequate insurance coverage will leave you feeling relieved if the worst was to happen.
When was the last time you checked your sums insured?
Even if you felt adequately covered when you first took out your insurance, when was the last time you reviewed it?
We recommend reviewing your insurance policy at least once a year to make sure it’s enough to cover the costs of rebuilding in today’s market.
Keep in mind that building prices have risen dramatically after COVID and the price you once thought it’d cost to rebuild might be seriously inadequate now.
Jody Williams is here to help
If you’re a property owner, contact us to see if we can obtain an indicate rebuild cost based on your address, which will give you an idea of the average replacement cost for your building.
It’s always better to be safe than sorry when it comes to insurance coverage. Don’t wait until something happens and you panic when you realise you’re not adequately insured.
Jody is always available to provide you with different options and prices to increase your cover. Reach out to her and her team at Oracle Group Insurance to get the peace of mind that comes with knowing your business is properly insured.
