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UNDERINSURANCE IN THE GUN TRADE

Underinsurance – what is it?

Underinsurance is when you don’t take out the right level of insurance. Or, put another way, taking out insurance at a level that’s simply not enough to cover what you want it to.

Why it matters

Between 2022-2023, our partners at Barrett Corp & Harrington (BCH) found 64% of buildings used for sporting pursuits to be underinsured. This means that 3 in 5 policyholders responsible for insuring a building used for a sporting function would have been underinsured in the event of a claim, facing a financial shortfall to reinstate their buildings post-loss. Though this rate of underinsurance is consistent with BCH’s experience of underinsurance found throughout all UK buildings (BCH found 67% of all buildings to be underinsured in Q3 2023), the average recommended increase to the Reinstatement Value of sports buildings was 74%.

To put this into context, a building insured for £300,000 prior to a BCH Reinstatement Valuation taking place, would have been issued a recommended Reinstatement Value of £522,000. Should the policyholder experience a total loss whilst underinsured, in this example they would be facing a shortfall of £222,000 to reinstate their building to an equivalent standard as it was prior to the loss occurring. We would expect very few business owners and sports patrons would be able to recover from such a significant financial loss.

If a property is underinsured, the insurer is likely to apply the Condition of Average clause, in which the amount of the claim is reduced proportionally to the value of underinsurance. It’s also possible that the insurer may be entitled to void the policy if it appears that the risk was unfairly presented.

Our partner

We work with Barrett Corp & Harrington (BCH), a professional buildings insurance valuation service, who carry out valuation services tailored to every customer, property, and policy.

In 2023 alone, from the surveys undertaken in partnership with Howden, BCH have made recommended increases to Reinstatement Values that would have prevented over £913m of underinsurance reaching the UK insurance market. Of the surveys yielding these results, 69% of Howden policyholders would have been underinsured prior to the Reinstatement Valuation taking place, with the average increase being a significant 61%, so there is no doubt that the activities of our partnership have helped to protect a large number of customers and aligned them to proper cover.

Our solutions

We offer two building insurance rebuild valuation services to support your asset management and ensure they are valued correctly.

Our Benchmark eValuation, an online valuation which can be carried out without the need for an on-site visit, is designed for single buildings only and costs £105 +VAT.

Alternatively, our Building Insurance Reinstatement Cost Assessment (RCA), is a traditional ‘boots on the ground’ valuation which is suitable for single or multiple buildings – costs vary depending on your property type and size.

Please see below for details of each solution.

Benchmark eValuation

What is it?

Benchmark eValuation is a fast and affordable desk-based method for establishing an accurate rebuild value. This virtual RCA allows you to save at least 80% of the cost, compared to a site-based RCA. For large portfolios, we also include a three-year valuation service.

Our eValuations are created to calculate rebuild costs, estimating the true reinstatement sum insured within 10% accuracy of a surveyor undertaking a full survey. They’re delivered within 72 hours of instruction and are based on:

  • Access
  • Digital planning data
  • Information provided by you
  • Latest digital mapping data
  • Location

This service is supported by some major insurers for average waiver guarantee.

Cost: £105 + VAT

Who’s it for?

This desktop eValuation is intended for any client who has not had their buildings professionally valued in the last 12 months. Designed for single buildings only, the maximum Building Declared Value must not exceed £7.5m for commercial property and £2m for residential property. We can also carry out this service on buildings listed up to Grade II (Grades I and II* will require a physical RCA, which is also available).

Starting your eValuation will take you to a dedicated Guncover page on the BCH website where you can provide all the information BCH needs to value your property.

Start your eValuation here
Building Insurance Reinstatement Cost Assessment (RCA)

What is it?

This traditional ‘boots on the ground’ professional building insurance evaluation has been created to establish the correct building reinstatement sum insured. It’s supported by major insurers for average waiver guarantee and complies with the Royal Institution of Chartered Surveyors (RICS).

Who’s it for?

This building insurance evaluation service is provided for any client who has not had their buildings professionally valued in the last 12 months. It’s suitable for single or multiple buildings.

Questions to ask which may indicate a property is incorrectly valued or should be considered for an RCA

  • Has a professional reinstatement assessment been carried out in the last 12 months? Covid-19 has had a dramatic effect on the cost of building materials.
  • Does the building have extensive external features such as yards, car parks or gardens?
  • Has the building recently been altered or extended?
  • Has the property been built with new eco-friendly features or designs?
  • Have changing building regulations been accounted for?
  • Is the location of the premises difficult to access (town centres, terraced buildings)?
  • Is the market value being used as the reinstatement value?
  • Is the property listed?
  • What is the age of the property? Older buildings often cost more to rebuild.

Costs for commercial and residential building evaluations

Current declared value Maximum fee (plus VAT)
<£1m £490
<£2.5m £680
<£5m £880
<£10m £1,460
<£15m £1,950
<£20m £2,340
>£20m Price on application

 

Costs for flat evaluations

Number of flats Maximum fee (plus VAT) Discounted fee per flat (plus VAT)
<5 £365 –
<20 £400 –
<75 £400 £20
<100 £1,500 £17.50
<150 £1,750 £12.50
<350 £1,875 £10.50
>350 £3,675 Price on application
Contact us for more information
Please contact us
if you have any questions
0121 327 1977
Need more information? Visit the Howden underinsurance hub
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Guncover is a trading name of Howden UK Brokers Limited, which is authorised and regulated by the Financial Conduct Authority No. 307663. Registered in England and Wales under company registration number 02831010. Registered Office: One Creechurch Place, London, EC3A 5AF. Calls may be monitored and recorded for quality assurance purposes.