The start of a new year is always a good time to take stock and review your plans, not least your business insurance needs. Perhaps one of your New Year resolutions should be to ensure that you have adequate and appropriate insurance cover for your practice?
You get what you pay for – Specialist cover required.
While it may be tempting to purchase a standard retail policy online, doing so could leave you exposed to coverage gaps or the risk of being underinsured. Quick and easy solutions aren’t always the best fit for your needs.
That’s why consulting health sector insurance specialists like us here at Lloyd & Whyte can make a significant difference. We ensure you have the optimal coverage tailored to your specific requirements. For instance, many online providers impose limitations on glass cover, which might not adequately protect the shopfront of an optometrist. Additionally, equipment breakdown is another crucial consideration— as opticians and optometrists, you rely on specialised tools, and a failure of essential equipment could lead to practice closures or reduced operations, which standard policies might not address.
Protecting expensive such as Keretometers, costing in excess of £2,000 makes sense and some pieces such as ophthalmoscopes may need to be covered if they are taken away from your premises.
You could risk being underinsured.
Any property owner needs to be aware of the risks of underinsurance. On average, underinsured buildings are covered for just 68%1 of the amount they should be. If your property was underinsured and was then destroyed, for example by a fire, you may not get sufficient funds back from your insurance to cover the cost of rebuilding, leaving you to bear the cost of the shortfall. This even holds true for smaller claims such as a broken window.
Getting a correct valuation, including all aspects of replacement, is vital to ensure that you don’t lose out if you need to make a claim. Whilst underinsurance can have a devastating impact, there is a simple and inexpensive solution.
Understanding Underinsurance – a common and costly risk.
Underinsurance occurs when the insured value of your property or assets is less than their actual rebuild or replacement cost. This issue has persisted for years, but with building costs currently at record highs, it has become increasingly prevalent.
Research by Rebuild Cost Assessment Ltd reveals that approximately 83% of commercial properties, including practices, are underinsured both internally and externally. On average, these properties are insured for just 66% of their required value1. The total estimated underinsurance for all UK commercial properties currently stands at an astonishing £375 billion. The most common cause? A failure to conduct regular property valuations.
The financial consequences of underinsurance can be severe and potentially devastating for your business. To avoid this, property owners and landlords should always declare the true, up-to-date value of their assets—or even insure them at a slightly higher value, within a permissible range. By doing so, policyholders ensure that they can fully recover their costs in the event of a claim, leaving no room for disputes with insurers, as premiums will have been calculated based on accurate sums insured.
Condition of average
Insurance policies often include a “condition of average,” which means that if the insured amount is less than the actual value of the property or equipment at the time of a loss, the policyholder must cover a proportion of the loss themselves.
In simple terms, being underinsured can significantly reduce your claim settlement. For example, if you insure your property for £100,000 but its true value is £200,000, any claim (even a minor one, like a broken window) would be reduced by 50%. In extreme cases of underinsurance, the insurer may refuse to pay the claim altogether.
This happens because insurers adjust claim payouts in proportion to the underinsurance. If you’ve only paid part of the premium required for full coverage, you won’t receive a full payout. Instead, the policyholder must bear the cost of the uninsured portion of the loss.
To avoid this, it’s essential to ensure your property and assets are insured for their accurate, up-to-date value. Taking proactive measures to address underinsurance not only safeguards your business but also provides peace of mind in times of uncertainty.
Are your insured sums adequate and have they been revisited recently?
The best way to assess the rebuild value of a property is to consult with a Chartered surveyor. Websites such as rebuildcostassessment.com can help. Buildings should always be insured for the amount it would cost to rebuild or reinstate them, NOT their market value. Lloyd & Whyte are able to obtain a cost assessment from Rebuild Cost Assessment on your behalf. It is important to take into account any outbuildings within the boundaries of the property and include the cost of debris removal and surveyors. Many factors affect the accuracy of this figure, such as the method of construction used, and whether the building is Listed or not.
Contents, stock and specialised equipment – reviewing your insurance coverage
If you’ve insured second-hand equipment, could you afford to replace it with brand-new equivalents if needed? Would specialised cover, such as for computer equipment, be more suitable?
Ensure your asset register is up-to-date and reflects current replacement costs. Have you informed your insurer about new equipment or stock, like sunglasses, recently added to your practice?
Regularly auditing your insurance, especially before renewal, helps ensure you have adequate coverage. Lloyd & Whyte can review your situation and provide expert advice to make sure your practice is fully protected.
As with glasses – One size does not fit all.
Guidance on Additional Relevant Policies offered. Relying solely on a standard business policy could leave you vulnerable to risks you might not have considered, such as cyber insurance.
As knowledgeable and specialist insurance advisers, we can provide clear explanations of these policies and how they can be tailored to meet your specific needs.
We offer complimentary commercial insurance reviews to AOP members. We review your policies, identify any gaps, and make practical recommendations to better protect your business.
1Data derived from 26,861 Rebuild Cost Assessments completed between Sep ‘21 and Aug ‘22.
2Estimate based on Zoopla data on UK homes with a market value exceeding £1m – Figures according to a survey conducted by RebuidCostAssessmet.com in 2019 https://www.rebuildcostassessment.com/
Lloyd & Whyte Ltd are authorised and regulated by the Financial Conduct Authority. Lloyd & Whyte Ltd is registered in England No. 03686765. Registered Office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA. Calls may be recorded for use in quality management, training and customer support.