Many businesses prioritise insurance and seek advice as to what covers they should consider in the event unforeseen event occurs given rise to a claim but we frequently find clients take a casual approach to their valuations and risk assessment aspect of their insurance.<\/p>\n
Having accurate valuations underpins the basis of insurance but clients often disengage and neglect this aspect fearful that it may lead to higher premiums and further cost and time obtaining a valuation report.<\/p>\n
What does the common lease advise?<\/strong><\/p>\n Lease agreements commonly make specific reference to costs that freeholders and property investors can recover from leaseholders. Like insurance, the cost for a third party to conduct a rebuild or reinstatement valuation, can be passed on.<\/p>\n The consequences of not getting the correct value in place cam result in underinsurance and have severe consequences if the Average Clause is applied if a partial of total loss occurs with claim payments being reduced by many thousands of pounds.<\/p>\n What is \u2018Average\u2019 and how does if work?<\/strong><\/p>\n Put simply this clause allows insurers to adjust their claim settlement proportionately to the value provided (deliberately or not) which was inadequate to the cost of reinstating the property in the event of claim.<\/p>\n For example: if a commercial property has a rebuild value of \u00a32m but is insured for only \u00a31.5m and a claim occurs costing \u00a3500,000, the insurer will pay \u00a3375,000.<\/p>\n