Business insurance guide
Underinsurance: Why Declared Values Matter
Using outdated rebuilding costs, contents values or interruption figures can leave a business exposed when a serious claim occurs.
Market value is not rebuilding cost
The amount a property could sell for may be very different from the cost of demolition, professional fees and rebuilding to current standards. A suitable reinstatement assessment can help establish a more reliable figure.
Values change over time
Inflation, new machinery, fit-out improvements and seasonal stock can make older sums insured inaccurate. Review values at renewal and after significant purchases or changes.
Business interruption needs its own review
The indemnity period should allow enough time to investigate, design, obtain permission, rebuild, replace equipment and recover customers—not simply repair the visible damage.
Focused commercial insurance guidance
Underinsurance starts with the wrong value
Underinsurance can happen when the amount declared is too low. This can affect property, stock, equipment or the time needed to recover after a loss.
Review important values instead of simply repeating last year’s figures. Rising costs and business changes can make old numbers unreliable.
- Review rebuilding costs.
- Update stock and equipment values.
- Check business interruption figures.
- Revisit values after major changes.
Current values are a key part of keeping cover suitable.