When was the last time you increased your declared value on your hospitality insurance? The reality is people are often left underinsured for a number of reasons (and some don’t realise it). Whether it’s trying to reduce the cost of the annual premium which has actually left you more exposed to risk, or simply not updating the change in circumstances.
In this post we’re looking at insurance for hospitality businesses and why the ramifications of underinsurance can be costly…
What is Underinsurance?
Simply put, underinsurance is when; at the time of an event or loss, the insured amount is only 90% or less than the actual cost required to replace or reinstate the property. Meaning, you haven’t insured yourself fully.
For hospitality businesses in particular this is an ongoing challenge to make sure you’re completely protected. Here are some of the questions you should be asking to make sure you’re not underinsured:
3 Questions to Ask in Insurance for Hospitality Businesses
1. Have you had renovations completed recently?
Make sure if you’ve undergone renovations or updates in your property that you update your declared values to reflect the new contents or value of the property. This may increase your premium, but it also increases your protection.
2. Have you considered the COVID “effect”?
COVID-19 is the ‘gift’ that keeps on giving, and there are some increases that have occurred as a result, including (but not limited to):
● Timber, steel, bricks, and roofing have increased by 30%. A standard timber package for a residential house would be on average around A$19,000, this has increased to A$24,000. Steel has increased by A$3,500 and concrete is up A$4,000 which means it’s A$7,000 more for slabs.
● Electrical wiring is up over 74% this year
● Homes are up A$36,000 in 6 months
● The lead time has also increased from 20 to 28-30 weeks
These are all things that will have an impact on the cost of replacing your property should something happen. And it’s not just things like COVID, you should take into account the current rate of inflation and always make sure you’re not underinsured.
3. How do you review your sum insured? (And how often?)
To get an accurate insurance value you can obtain a valuation on your property from a quantity surveyor. How often will depend on your current circumstances. If you’ve recently had renovations, you should have your building revalued upon completion of works and update your insurance accordingly. If nothing has changed, you should review your insurance policy and declared value every year to make sure nothing has changed.
Ultimately, underinsurance can cost you a lot more in the long term which is why insurance for hospitality businesses is so important. If you need help with finding the right insurance, at the right price for your business, get in touch with one of our experts, or learn more here: https://www.quantaco.co/insurance-and-risk/.
