Insurance is a fundamental area in protecting the things people value most. For some that means covering their life and their assets, for others it’s their business. This is important so that you can protect what has taken a lifetime to achieve.
A policy needs to be carefully selected and having the right covers is a cornerstone. However, care also needs to be taken to avoid underinsurance.
What this is, who it applies to and the best way to avoid it are explored below.
What is underinsurance?
Underinsurance essentially arises when a party insures something for less than its full replacement value. In the event of damage or loss, a party may be at risk of being penalised for electing to insure at a lesser value. It’s highly important to take steps to ascertain and maintain a correct and current level of cover to avoid this.
Who does it relate to?
Underinsurance can relate to almost any insurance policy where a sum insured is provided by the insured and caution must be taken when setting insurance limits as the flow on effects can be disastrous.
How can it be avoided?
In the case of building values, by regularly checking your cover and seeking advice from a licenced valuer. This will enable you to keep up to date with the latest changes to rebuild values, taking into consideration the demolition and clearance of the sight, any professional fees that may be applicable (architects, surveyors, engineers reports etc) and allowance for any changes that have recently come into effect arising from federal, state or local government building codes.
If finding the right level of cover is important to you, get in touch with the MGA team today, they will point you in the right direction.