How to avoid underinsurance as building costs inflation reaches record high

Underinsurance remains a concern for many people and businesses. Underinsurance worsened during the COVID pandemic, and the Chartered Institute of Loss Adjusters has reported that over 40% of all commercial claims exhibit some degree of underinsurance, which is now compounded by soaring inflation.

A new guide from the British Insurers Brokers’ Association (BIBA) advises how to avoid it, and BIBA member, TL Dallas is keen to meet with clients to ensure the right levels of insurance are in place.

Written with loss adjuster and BIBA valuation facility provider, QuestGates, the new ‘guide to valuations’ looks at macro issues that impact sums insured. It also highlights the importance of reviewing sums insured and making accurate valuations of buildings, plant, machinery, and other contents as well as estimating suitable indemnity periods in business interruption cover. 

Managing Director, Polly Staveley, from TL Dallas, added: “Underinsurance is a serious concern and can leave a policyholder responsible for a large percentage of a loss where the discrepancy is significant. Part of our role is to try to ensure this doesn’t happen and advise clients on setting correct sums insured, albeit we are not professional valuers so we recommend their services should always be sought.

“We will also assist with setting the right levels of business interruption cover and indemnity periods, which are especially critical as there are often long delays in deliveries of replacement machinery and also building material supplies are still somewhat disrupted. This new guide from BIBA will act as a great aide-memorie when it comes to reviewing clients’ policies.”

Alistair Steward, director at QuestGates highlighted that: “Getting the sums insured stated correctly at the time of inception of the policy makes the claims process so much easier, avoiding difficult conversations with customers around underinsurance and enabling prompt and full claims settlements.”

To download a copy of the guide, click HERE and to arrange a call with TL Dallas contact your nearest office. 

No place like home – keeping art properly protected on the move

When a piece of art is static and in its regular ‘home’ – whether that’s a painting on a wall or sculpture on a plinth, it is usually well protected and unlikely to get damaged. It’s when clients need to move their art – either to a different home, overseas or to an exhibition or museum – we see increased risk to these valuable pieces.

When people think about threats to artwork, front of mind is usually theft and fire, but it’s more mundane risks like moving art when we see the most damage, and these claims are often the most challenging.

High profile examples of damage to masterpieces and ancient works of art in transit shows how real this threat is. In 2001 Rembrandt’s ‘Portrait of an Elderly Woman’ arrived in Moscow from Houston with a large gash in the canvas. In 2000, the 9th Century Book of Kells was reportedly affected by vibration after a flight from Ireland to Australia. If damage can occur to such pieces, it drives home the need for every owner of art to ensure they are doing everything to mitigate risk when their pieces are on the move.

 

Leave it to the specialists

Clients should be just as discerning about their transit company or shipper as they are about their art collection. The art market is, after all, completely unregulated. There’s no code of conduct, so you rely on the specialist knowledge and experience of shippers and packers. Fine art shippers can work with auction houses, curators and collectors on a loss prevention analysis to assess the best way to move the item and to arrange for adequate handling and storage throughout the journey. However, there will always be times of increased risk, particularly with international transit. Curators and owners often choose to travel with artworks but even they can’t go in the hold! A condition report can be carried out on both sides, before the piece travels and when it arrives, much like when you hire a car on holiday, which gives both the owner and insurer peace of mind.

“We always advise our clients – commercial and private – to use a professional shipping company who specialise in transporting different types of collections. Nevertheless accidents can still happen. Many of the losses you see in transit are down to human error such as a third party putting a forklift through a crate or dropping an artefact while being carried.”

 

Preparing to manage moving art

We appreciate our clients may often have more than one property and will want to move their art or antiques between homes, sometimes overseas. There can also be frequent movement between galleries and museums.

There are three key areas to think about:

• Collectors often don’t think about insurance from the moment of purchase. Once bought, at the auction house or a private sale, it is the collector’s asset and needs to have cover in place, especially when it is being transported. You should be aware of insurance policy conditions following new purchases. Some policies provide automatic cover for newly acquired art and antiques up to 30% of the total sum insured under this section provided your insurer is advised within 60 days of the purchase.

• Artwork is at its most vulnerable when it is being moved, so it is vital to use a professional and specialist transit company who will treat the item like it is their own. Auction houses and dealers will be able to make these recommendations, as will your insurance broker who will have personal knowledge of the leading international fine art shippers and packers.

• Collectors are increasingly buying art as an investment. Whatever their motives for collecting it is important they maintain up to date valuations for their collection.

 

For further information contact Michael Gregson, TL Dallas Private Clients on 0131 322 2634 or email michael.gregson@tldallas.com.

 

Source: Dr James Lindow, Underwriting Director, Ecclesiastical’s Art and Private Client Team

 

Insuring gifts and purchases

Whilst never at the top of anyone’s ‘to do’ list, it is important to remember any new presents you may have given or received, that are now within your home, are added to your insurance policy to be adequately protected.

New items – particularly jewellery, watches and works of art – should be notified to your broker. Some policies provide a contingency cover for newly acquired valuables, although it is important to remember that this tends to be limited to a percentage of the existing ‘specified’ sum insured for that category of valuable. Typically, this is 25% with a requirement that the new items are notified to your insurer within 60 days.

It is also important to review your overall ‘general contents’ sum insured after the festive period to ensure that this remains adequate to reflect new acquisitions such as clothing, electrical equipment, furniture and so on. Remember – any items bought in the sales should be insured for the full replacement value!

If you would like more information please email personalinsurance@tldallas.com.

Always judge the cover

Whether your passion is Macallan Malts, Monets or the complete works of Jane Austen, we’ve got you covered. We understand your collections mean a lot to you and we pride ourselves on arranging insurance polices to protect your treasures.

As you might expect, since 1919 we’ve built up a sound knowledge of homes and cars, but our teams have also acquired valuable experience for a variety of special interests including, but not limited to:

  • Book, stamp and toy collections
  • Whisky & wine collections
  • Arms & armour
  • Rare musical instruments
  • Equine & livestock
  • Private jets & watercraft

For further information, or to discuss your insurance requirements, please contact Zara Burns on 020 7426 5346 or email collectables@tldallas.com.

Making a will

Peace of mind. Security. Protection. Quite simply, making a Will is one of the most important things you can do to safeguard your loved ones and your assets. Having a Will ensures your money, property and possessions go to those you care about. It also allows you to appoint Guardians to look after your young children, leave legacies to charities and make funeral arrangements. Having an up-to-date Will gives your family the confidence of knowing they have been provided for and gives you comfort in knowing that your affairs are in order. Without a Will, your assets could be made over to people you would not expect or desire to inherit from your estate.

A Will gives your family the confidence of knowing they have been provided for and gives you comfort in knowing your affairs are in order.

Your surviving spouse has certain rights called Prior Rights to the house, to its furnishings and to cash, each up to a defined value which changes every few years. Your spouse and children have automatic Legal Rights to a share of the moveable property. Your moveable estate includes such things as money, shares, cars, furniture and jewellery. The remaining estate, once Prior Rights and Legal Rights have been claimed, is divided in a particular order, with children, parents and siblings all inheriting before a surviving spouse.

Many people are also under the impression that if they have lived together with a partner for a number of years and they are cohabiting, that their estate will pass to their partner. However, a cohabitant has no automatic right to inherit anything and that is the case no matter how long a couple live together.

A cohabitant can ask the court for a share of the estate if their cohabitant dies without a Will. The claim must be made within six months of the date of death. The court may decide not to award anything and cannot award more than a spouse could inherit. The court considers a number of factors such as the size of the estate, any other money received by the cohabitant from pensions etc, the extent of any other claims and whether Prior and Legal Rights have been claimed by a spouse or any children.

Whilst it can seem rather morbid thinking about your own mortality, one of the most important things we can do for our loved ones is to ensure that there are clear instructions setting out our wishes. The only way is to set it out in a properly prepared Will. This means that you are given the choice to divide your assets amongst family, friends and causes you care about.

Writing a Will is prudent planning for the future and ensures that those who are left behind are not burdened with the often onerous and expensive task of administering your estate without a Will. We cannot predict the future, but we can help you plan for it, providing comfort that your ffairs are all in order.

For further advice, please contact Laura Burns on 0131 516 5359 or email lburns@gilsongray.co.uk.