{"id":137471,"date":"2024-02-28T07:47:15","date_gmt":"2024-02-28T07:47:15","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=137471"},"modified":"2024-02-27T13:47:04","modified_gmt":"2024-02-27T13:47:04","slug":"tysers-insurance-brokers-underinsured-policyholder","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/tysers-insurance-brokers-underinsured-policyholder\/137471\/","title":{"rendered":"Tysers Insurance Brokers negotiates better settlement for underinsured policyholder"},"content":{"rendered":"

Tysers Insurance Brokers<\/a> warns of the dangers of underinsurance in the construction industry, as many businesses risk having to make up the shortfall if their policy does not provide sufficient cover<\/h2>\n

Client A suffered a flood on October 2nd<\/sup> 2023, which caused damage to machinery and stock totalling \u00a360k. Client A had a Commercial Combined policy in place; however, the machinery was underinsured* with their policy only covering 30% of the total value.<\/p>\n

After the claim was assessed, the loss adjuster applied the \u201cAverage Clause**\u201d to the whole claim, offering Client A just \u00a319k compensation, a massive shortfall compared to the damage caused by the flooding.<\/p>\n

Tysers challenged the adjuster on the basis that only the machinery was underinsured, with the rest of the cover being sufficient to cover the damage to stock, and the adjuster correctly applied the \u201cAverage Clause\u201d to the machinery claim only, which was around \u00a310k. This resulted in an improved offer of \u00a347k total, which was accepted by Client A.<\/p>\n

This case demonstrates two important lessons for businesses of all sizes. Firstly, the importance of having adequate insurance to cover all stock, machinery and contents that may be damaged by flooding, fires or other perils.<\/p>\n

It also underlines the value of having an experienced construction insurance broker<\/a> and claims team who can negotiate on your behalf when claims occur to ensure you get the best outcome.<\/p>\n

What is underinsurance?<\/h3>\n

Underinsurance occurs when the policyholder has insufficient cover for their needs.<\/p>\n

An underinsured policyholder still has some level of cover, but when claims are settled the financial compensation received from insurers will be less than the amount needed to rebuild, replace stock or cover business interruption costs.<\/p>\n

There are many areas where a business may be unknowingly underinsured from building, stock and contents cover to business interruption and cyber liability.<\/p>\n

An experienced construction insurance broker such as Tysers can review your current policies and risk exposures to ensure you have adequate cover in place.<\/p>\n

It is also important that clients make their broker aware of any changes such as new machinery or increased stock to ensure their policy will still be sufficient.<\/p>\n

What is the Average Clause?<\/h3>\n

Insurers can apply the \u2018Average Clause\u2019 to claims made by underinsured businesses, which can result in a lower settlement amount than the policy limit.<\/p>\n

If an insurer discovers that a business has inadequate insurance, the settlement can be reduced by the same percentage as the asset is underinsured.<\/p>\n

Claims example with the Average Clause applied<\/h3>\n