Your physical security – to ensure it matches the requirements of your insurer and is appropriate for your business needs.
Stock Values – Claims are settled on a cost only basis and your sum insured should reflect this value. You should also include separate amounts for any target stock items that you may have, for example electrical items. The cost of removal of damaged stock and debris needs a separate insurance item to ensure cover is in place.
Machinery Plant and All Other Contents – Furniture, fixtures, fittings and machinery are usually insured on a Reinstatement basis and the sum insured should be based on their new replacement value. You should also include an amount for proprietors’ and employees’ personal belongings, debris removal, the cost of reproducing your business books and computer records and any fees that may be required for lawyers, architects and surveyors. Occasionally, you may have chosen to insure on an Indemnity basis which would allow for a payment based on the current value of the item, taking into account deductions for depreciation or wear and tear, based on the age and condition of the equipment at the time of the loss.
Buildings and/or Tenants Improvements Cover is on a Reinstatement basis and you should insure for the full rebuilding cost, not the market value, and this should take into account any possible increase in cost due to delays in rebuilding and/or alterations in rebuilding design. The sum insured should also include the cost of clearing the site, fees for lawyers, architects, surveyors and consulting engineers (as a guide, this is usually 10-15% of the rebuilding cost), walls, gates, fences, outbuildings and annexes, and any signs and nameplates.
The most effective way of achieving an accurate sum insured is to obtain a professional re-building valuation and we have access to a low cost RICS valuation service for buildings that you cover. Many policies include an ‘Average Condition’ which means that if your sum insured is found to be inadequate following a loss, then your claim payment may be proportionately reduced. For Buildings this could add up to many thousands of pounds.
VAT If you are non-registered, exempt or partially exempt you should ensure that all sums insured are adjusted to include the non-recoverable VAT element.