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Whilst insurance policies are often seen as a necessary evil it is obviously vitally important that they do react if the worst does happen. However one area that a frighteningly large number of businesses face when a claim occurs is their settlement being reduced by insurers as a result of the sums insured under the policy not being adequate. In essence an insurer will reduce any claim settlement whether a small or a total loss by the percentage of underinsurance i.e. if your sums insured are 20 lower than they should be the insurers claims settlement will be 20 reduced. If a claim runs into many thousands of pounds these deductions can be crippling. Therefore it is important to check whether your sums insured are adequate in the various areas concerned under your PropertyMaterial Damage insurance l Buildings Tenants Improvements These should reflect the rebuilding of the property inclusive of debris removal costs and professional fees rather than the market value. Ultimately professional valuations are the best way to ensure these figures are correct whilst there is a cost in obtaining a professional valuation this could well be insignificant in comparison to the deduction made by an insurer if you have a large loss and there is underinsurance. l Machinery Plant All Other Contents Most policies work on a reinstatement basis i.e. they would replace damagedlost items in the event of a claim. Therefore the sums insured here need to be based on replacement as new figures opposed to the depreciated values that may be shown on accountants records. l Stock Claims in this respect are settled typically on a cost replacement basis rather than your expected retail value. It should also take into account all elements of your stock from the raw materials work in progress and finished goods. Of equal importance and often confused is ensuring that your Business Interruption cover is appropriate. There are two elements to this l The figure being accurate typically Gross Profit cover is provided. The insurers terminology here is frustrating as insurance gross profit is calculated in a different way to an accountants version with the insurers taking into account fixed costs. This is a key point which is easily confused and can lead to the level being inadequate. l The Indemnity Period a large number of businesses choose a 12 month period which is rarely long enough. This period should be sufficiently long enough to take into account worst case scenarios e.g. if there is an insurable incident that badly damaged your premises and brew kit would 12 months be long enough to rebuild your premises including obtaining planning to rebuild order install new kit and get your turnover back to the level it was at prior to the incident often a factor that is overlooked At Clarke Dove Insurance Brokers we annually check with our clients the adequacy levels of the cover under our brewery-specific policy Willis Brew and are more than happy to talk through your requirements. Contact details can be found at www.brewery-insurance.co.uk The risks of underinsurance 64 BREWING BEVERAGE INDUSTRIES BUSINESS Insurance Matt Bryan has been with Clarke Dove Insurance Brokers for 14 years as a Commercial Account Executive working alongside MD Andy Clarke in servicing their over 200 strong brewery client base. Launched over 5 years ago Willis Brew is the bespoke brewery insurance policy offered by Clarke Dove providing flexible cover to suit the needs of the full range of micro breweries - from the smallest to the largest. 64_Layout 1 21042016 1525 Page 1