Valuation firm finds that 75% of properties were underinsured in instructions received last year
Underinsurance continues to be a chronic issue in the UK, according to new statistics from buildings insurance valuation services company Barrett Corp and Harrington (BCH).
Reviewing its portfolio of clients that had engaged them to value buildings, BCH’s analysis – published in February 2023 – found that the vast majority of its customers had significantly underestimated the level of insurance they needed to protect their assets.
The company revealed that in 2022, its valuations and recommendations prevented around £4bn of underinsurance hitting the UK property insurance market.
Of the valuations it carried out last year, BCH found that 75% of these instructions were underinsured, while 25% were overinsured.
Over the course of 2022, the company appraised buildings with a total reinstatement value of £39bn.
Primarily, BCH works with brokers and insurers to determine commercial declared values. Property owners and direct domestic policyholders account for around 10% of its business, while 60% of its instructions concern commercial buildings which are not defined as an owner occupied house or block of flats. Commercial policies insuring blocks of flats make up the remaining third of its business portfolio.
Finessing sums insured
Across its portfolio last year, BCH found that its average suggested increase per sum insured was £690,000, with an average 50% increase suggested on buildings that were found to be underinsured.
Of the buildings found to be overinsured, the average suggested decrease in 2022 was 14%.
The largest increase to a sum insured last year was 490%. The biggest decrease was 69%.
“BCH made suggested increases which prevented £4bn of underinsurance reaching the UK insurance market,” the firm said.
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