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96% of East Midlands businesses without adequate commercial building insurance

A recent survey of business properties across the East Midlands has found that a staggering 96% are underinsured. Furthermore, in order to have the correct amount of building insurance cover, a 73% increase in the existing sum insured is necessary on average.

The survey was carried out by Barrett Corp & Harrington Ltd, specialists in insurance valuations. A comprehensive survey taking five years to complete; it was discovered that the problem is found throughout the area. Various properties were found to have inadequate commercial building insurance including retail outlets, warehouses, factories, hotels and manufacturing premises.

Russell Scanlan, an independent insurance broker and risk management company, believes that the problem is related to the recession. Based in the East Midlands itself, Russell Scanlan suggests that many businesses may be in a precarious position because of this problem. Should a business need to make a claim for loss or damage, their current building insurance policy may not suffice.

Development Director at Russell Scanlan, Mike Dickinson, goes on to say: “Times are tough, and many people believe that because of the sluggish economy, their property is unlikely to have gone up in value. That’s actually not the issue as insurance policies are concerned with the re-building cost of the property rather than the market value which can, in many cases, be very different figures.

“We’ve dealt with a number of cases recently where firms in the East Midlands have been prejudiced when they have had a claim because their commercial property insurance cover falls well short of the mark. It’s important that we highlight this issue to help other businesses avoid the same fate.

“Yes, an insurance review may, in the short term, lead to a slight increase in premium and the need for a professional valuation. But that’s a small price to pay in the long term. We believe it’s simply not worth businesses taking that risk in this difficult climate.”

The survey carried out by Barrett Corp & Harrington Ltd ran from just before the 2007 recession kicked in, right up to the present day. The problem was initially brought to light by problems encountered when conducting their day-to-day business of assessing commercial building insurance valuations.

The Director of Barrett Corp & Harrington Ltd, Roger Corp, noted: “Underinsurance is a major issue in the UK. The degree of underinsurance highlighted by our statistics can, unfortunately, lead to financial disaster for a business – impacting on shareholders, directors, employees, their families, suppliers and other contacts.

“By regularly reviewing the value of their property assets, businesses will be far better placed to manage the risks and ensure they are adequately protected if the worst were to happen.”

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