Could you be underinsured?

Name: Cornish Mutual
Address: Cornish Mutual Assurance Co Ltd, Newham Rd, Truro, Cornwall, TR1 2SU, GB
Telephone: 01872 277151

From storms and flooding to prolonged dry weather, fire and theft, recent events have been a reminder of just how quickly circumstances can change.

For farmers and rural businesses, the impact is significant. Damage to buildings, machinery and equipment causes added disruption at an already challenging time. Alongside this, the cost of repairing, rebuilding and replacing machinery and equipment continues to change, so it’s important to check your insurance still reflects what things would cost to put right today.

While you can’t predict what will happen next, you can make sure you are properly prepared and having the right cover in place is an important part.

What is underinsurance?

Underinsurance happens when the amount you are insured for is not enough to cover the full value or cost of replacing or rebuilding what you have insured.

It can happen more easily than you might think. Buildings may have been extended, altered or improved since their value was last reviewed, while the cost of rebuilding also changes. The price and availability of building materials, labour costs and access to skilled trades all affect the cost of putting a building back as it was.

Machinery and equipment costs change too. You may have bought, replaced or upgraded items, and as their value and availability fluctuate over time, machinery, equipment and contents should be reviewed regularly to make sure the sums insured reflect their current replacement values.

All of this means the sums insured that were right when you first arranged your cover may no longer reflect what it costs to repair, rebuild or replace what you have today.

And when the unexpected happens, being underinsured could leave you short financially when you least need it.

Jo Hawkins, Field Insurance Advisor at Cornish Mutual, says: “Underinsurance isn’t always obvious. We encourage Members to review their sums insured regularly and talk to us if they’re unsure. Taking the time to check your cover now can help avoid an unexpected shortfall if you need to make a claim.”

Check your cover

Having the right level of insurance is only part of the picture. The sums insured also need to accurately reflect the assets you are protecting.

For buildings, this means considering the full reinstatement cost – the amount it would cost to rebuild the property – rather than its market value.

Cornish Mutual has an in-house building valuation tool which can help calculate the rebuild value of farm and residential buildings and reduce the risk of underinsurance.

Take time to review your insurance

Insurance is there to provide reassurance when things go wrong. Taking a little time to review your policy now can help make sure the protection you are relying on will be there when you need it.

Consider whether: