You may remember our recent article that explored the types of insurance that are critical for freeholders.
One of the biggest issues we come across is under-insurance where, as the name so aptly suggests, the value that freeholders have insured against is substantially below the actual amount they should be insured for.
Just recently we came across a case where a block of flats was insured for £22 million, a not so insignificant amount. Yet, the real value was later found out to be closer to £40 million.
Sadly, in this case, before the correct value could be applied, a claim occurred, and the insurer only paid the settlement to the insured value. This left the client having to finance the gap – a very large one in this case.
Of course, the result of this particular case doesn’t even bear thinking about, many of us would struggle to find a spare £20 million behind the sofa. What it does perfectly highlight is that insurance, and the right level of insurance, is critical. After all, you are buying insurance to protect you should the worst happen, so having a policy that is woefully undervalued is about as much use as having no policy at all.
Tom Russo, Property Insurance Specialist at Kerry London Insurance Brokers
