Blog

DON’T GET CAUGHT OUT BY THAT PERFECT STORM OF UNDERINSURANCE

DON’T GET CAUGHT OUT BY THAT PERFECT STORM OF UNDERINSURANCE

DON’T GET CAUGHT OUT BY THAT PERFECT STORM OF UNDERINSURANCE

Our clients do not have to be told that the last two years have been some of the most challenging periods for Farmers, Business Customers, and Homeowners literally in Decades. Every time we turn around we hear and read about Inflation caused by multiple factors such as Covid’s effect on Supply Chains, Building booms across the world, Labour Shortages, and more recently the war in Russia causing an unprecedented Energy Spike. Every factor seems to be ever more challenging and it is now in a time of turmoil that we must not take our eye off those factors, which could prove very costly in the future if we overlook or fail to appreciate them.

In Insurance terms, this is the Issue of Underinsurance. In the event of a claim not having your property properly insured will result in a lower payout which likely won’t be adequate to undertake repairs. At a very basic level if you only insure your property for 60% of its value you will only be paid 60% of your claim in most cases. Bear in mind that Construction Inflation in Ireland according to the Society Of Chartered Surveyors in Ireland (SCSI) was at 13% in April and has risen rapidly since.

 

What Can I Do?

 

 

For Commercial Companies

The challenges are many because of these factors. Will I be able to rebuild for the figures I have insured my buildings? Will I be able to source a key piece of equipment within a reasonable time frame and I need to look at the Business Interruption period I am insured for? Will we be able to get parts to enable us to repair key Vehicles in our fleet in the event of damage.

With property cover, it is imperative we ensure we are using the correct inputs when calculating Insurance levels. What is the square footage / Meterage of my building? What rates should I apply?

Consider using resources such as the Buildcost Charters Surveyors Guide but bear in mind that the rates refer to 2021 so they need an uplift. An alternative is to undertake a Value at Risk Survey, which large organisations should do as a matter of good housekeeping every number of years.

 


For Farmers

Farmers in common with all other property owners are facing challenges on many levels. Valuing Sheds and Outbuildings can be a challenge with costs such as poured concrete changing almost weekly. Buying steel now to rebuild a shed is a challenge. Often the Contractors can only get quotes for sheeting and steel that will hold for 15 days. The attached link to a guide prepared by Pro Adjust will be helpful but bear in mind that inflation is ongoing so this can only be a guide.


For Homeowners

You need to consult the SCSI Website and do a calculation based on their easy calculation tool. You will need to know the square footage or square meterage of your house. Enter your data in their tool. Bear in mind that these rates refer to 2021 so if you want to be extra vigilant you can a further percentage to recognize the additional pressures on Inflation such as the war since then.





For more information, you can click the link below and read the SCSI House Rebuilding Guide (2021)




As always, thank you for reading.

If you have any further questions/queries, feel free to click the button below or reach our to me directly.


Colm Mahon CIP QFA | Director

Aviva Zurich Ireland
				jQuery('#s5').cycle({
					fx:    'scrollUp',
					delay: 500
					});
				
			
RSA Ireland Axa Insurance Allianz Insurance Logos
				jQuery('#s6').cycle({
					fx:    'scrollUp',
					delay: 1000
					});
				
			
Prestige nsurance Logos Wrightway Underwriting Limited Insurance Dolmen Insurance Brokers Pen Underwriting
				jQuery('#s7').cycle({
					fx:    'scrollUp',
					delay: 1500
					});
				
			
Optis Insurance Kennco Underwriting
				jQuery('#s8').cycle({
					fx:    'scrollUp',
					delay: 2000
					});
				
			
Thomond Underwriting AON INsurance Ireland ARB under writing
				jQuery('#s9').cycle({
					fx:    'scrollUp',
					delay: 2500
					});