Underinsurance has cost AU$1.85 trillion over the last decade.
A recent report published by global reinsurer Swiss Re, has reported that in Australia, general property underinsurance puts AU$3.85 billion at risk. It also stresses that unless something is done to combat this global challenge, losses will continue to mount.
Even the most comprehensive insurance policies will leave your business exposed if you don’t insure for the right amount. The main problem however is that it’s difficult to work out how much it would cost to rebuild if disaster strikes, and most business owners don’t realise they are underinsured until they have to claim. While most people don’t deliberately underinsure, it can be difficult to estimate the actual costs of repair, for example:
- It can be more expensive to replace a damaged property than it is to build from scratch because there’s demolition to consider, and construction costs rise over time.
- Business owners often forget to include renovations and improvements in your sum insured.
PSC Insurance Brokers offer their recommendations on setting an accurate figure when it comes to insuring your property:
Use a Quantity Surveyor
A quantity surveyor, architect or builder may be able to provide a more accurate cost estimate for rebuilding and repair costs.
Use An Online Calculator
There are several online calculators available for estimating property costs. Choose one that asks detailed questions and compare the answers from at least three others. It may be worthwhile asking a builder, architect or quantity surveyor for their opinion on the final figure.
Keep Up With Rising Construction Costs
It’s important to monitor and increase your sum insured every year to keep up with construction costs. According to the Australian Bureau of Statistics, the cost of building a new home rose by an average of 7.7% each year in the decade to 2008.
Include Supplementary Costs
Supplementary costs associated with rebuilding, such as demolition, professional fees and council fees should all be included in the estimate, as well as the cost of meeting modern building standards.
Keep Up to Date
Ensure that your sums insured are always kept up to date and account for any improvements or renovations you make as well as any new possessions you acquire.
Speak to Your Broker
Accurately valuing your property involves many considerations and can be extremely difficult to get right. PSC Insurance Brokers can advise you to ensure your property is not underinsured.
Don’t be one of the many business owners who don’t realise they are underinsured until after a disaster. Speak to your PSC Insurance Broker today.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.
