Consultant warns that 50,000 commercial buildings may be under-insured
Up to 50,000 commercial properties in the UK may be under-insured according to property consultant CNP.
Following the tornado in north London last week, where some residential property owners have been left with severely damaged or destroyed homes and no insurance, CNP warns that commercial properties are also at risk.
Commercial property owners are being urged to keep their insurance up to date as a shocking number have let their policies lapse.
David Nurser, joint managing director of CNP, said: “CNP has carried out ‘reinstatement cost assessments’ (RCAs) this year on around 2,500 commercial properties with a total reinstatement value of approximately £4.5bn.
"From our experience it is clear that a substantial volume of commercial property – we estimate around 50,000 commercial properties across the UK – are currently under-insured. This means that every year thousands of insurance claims fail to meet the costs of rebuilding a property destroyed by an insured risk because the rebuild costs are out of date, or have been incorrectly assessed.
"Ultimately this shortfall in the insurance figures has to be met by the owner and can run into many millions of pounds. If a development is only insured for half of its rebuild cost, the payment will be half the loss. If it is under-insured, “averaging” will be applied. With the rising costs of construction in the UK, it is simply not good business to continue without having the reinstatement cost of a property assessed at least every three years. As last week’s tornado proves, disaster can strike at any time.”