Prevent the trauma of under insurance

– get value for money from your insurance premiums

By:   John Meadows of Sagar Insurance

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Prevent the trauma of under insurance  –  Insurance works by pooling risk. A large group pay their premiums in to the insurance pool and this allows the insurance companies to pay the claims which arise (whilst also making a profit themselves!)

Everyone pays a substantial amount to insure their businesses and they need to be confident that if they need to make a claim then it will be paid in full. The amount each individual pays in premium is based on the amount of risk, or exposure their business activities brings to the pool.

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One of the main measures of exposure is the value, or the sum insured, of buildings, contents and gross profit. Insurers need to ensure that everyone is paying a fair premium in to the pot and so very often there is an “under insurance” clause in the policy wording.

For instance if it would cost £2m to rebuild a building but it has only been insured for £1m then only half the fair premium has been paid and consequently insurers will only pay out a proportion of the claim. The consequences for the business can be disastrous and the premium paid suddenly does not look “good value for money”.

A few guidelines to avoid under insurance :-

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Understand what should be included in the sum insured.

For instance the sum insured for buildings is what it would cost to rebuild including such things as removal of the debris and applying for planning permission. The market value may well be higher or lower than the cost to rebuild.

The sum insured on Gross Profit should include the wage roll as in most cases staff will still need to be paid even though the company may not be trading or trading on a reduced basis. The exact figure can be decided in conjunction with your accountant.

Understand the basis of cover.

Contents are generally insured on a reinstatement basis which means that they are replaced on “new for old” basis but the sum insured needs to reflect the cost of the new items. It is possible to insure contents on an indemnity basis where items would be replaced by equivalent second hand items. This may be appropriate where a lot of machinery is to be insured and there is a healthy second hand market in those machines. The sum insured can be lower with a subsequent saving in premium. The logistics of replacing items quickly needs thorough investigation.

Insurance Time to Rebuild

Understand the timescale

Business Interruption insurance covers the loss of gross profit following a claim. Do not underestimate the time it would take the business to recover from the effects of a large fire or flood. Rebuilding can take longer than expected and customers disappear in to the ether.

The moral of the story

Give careful consideration to your sums insured and ensure that you get value for money from your insurance


Sagar Insurances logo

Contact Details

Telephone: 01282 858250

Facsimile: 01282 858299
Group First House

12a Mead Way

Shuttleworth Mead


Lancashire BB12 7NG


Ossie Respite Centre – £450k from NatWest

We introduced  Andrea Brighouse, MD of My Life My Choice Ltd  to NatWest who have provided £450,000 of funding.

From: David Sharpe

Pierce Corporate Finance are delighted to have helped Andrea Brighouse develop her business plan and to have provided advice on how to move forward with the Respite Centre project.


From Left to Right:

Gary Swift (NatWest)

David Sharpe (Pierce Corporate Finance)

Andrea Brighouse (MD of My Life My Choice Ltd)

NatWest’s Press Release.

My Life My Choice Respite Centre To Open in Oswaldtwistle with Support from NatWest


A respite and activity centre for children and young adults with disabilities is due to open in Oswaldtwistle.


My Life My Choice Ltd is opening a new privately-run 24-hour care facility on the site of the old Masonic Hall on Albert Street after securing £450,000 of funding from NatWest.


The new centre will cater for up to 40 clients during the day, and create an additional 33 jobs.


Refurbishment works include creating eight bedrooms for overnight accommodation as well as a hydro therapy pool, ball room, and additional play and learning areas.


The support provided at the centre will also be extended to the parents and carers.


Mum Andrea Brighouse is the managing director of My Life My Choice Ltd and has been running similar centre called Blue Tin Roof in Blackburn for more than 11 years.


She said: “My eldest child, whom is now a 26-year-old adult has Neurofibromatosis, learning disabilities and autism. I had previously worked in the respite industry for over 10 years where I gained an understanding of the industry and the challenges faced by carers and centres alike.


Like other parents in my situation I came to a place where I thought I could do it better and provide a level of care I thought was right so I started the first centre.”


My Life My Choice will provide 24-hour respite services, seven days per week, 52 weeks per year.


This will include hourly care, before and after school clubs and outreach services for children and young adults, and support services for parents, guardians and carers. All services provided are flexible, responsive and tailor made to meet each individual’s needs.


Andrea said: “We are on-call 24 hours per day, for those families that need such a high level of provision. Those families can ring us up in the middle of night or in an emergency and we will be there immediately to provide the support or care needed.


We also plan to take clients on activity holidays.


We know there is a need for this type of service in the area and are committed to doing what we can to help.”


The centre is due to open after Easter and Andrea said there is already a waiting list for some services.


Andrea praised the support she was given by NatWest Healthcare Relationship Director Gary Swift. She had been working with another bank and was introduced to Gary by David Sharpe of Pierce Accountants in Blackburn.


David Sharpe and the Pierce Corporate Finance Team helped Andrea develop her business plan and provided expert advice on how to move forward with the project.