Underinsurance - Property & Business Interruption - When Can It Be Tested?

Assuming a loss has occured, when can the adequacy of cover on Property and Business Interruption Policies be tested and when should a Policyholder know if an underinsurance penalty applies?

When can the adequacy of the Sums Insured be tested?

Immediately! A full list of the replacement value of all the Policyholder’s property should be prepared at the earliest opportunity. This may be sourced from valuations, asset schedules, depreciation schedules, floor plans, physical inspection and employee recollection.

A full history of sales and Profit & Loss Statements should also be supplied. If records have been destroyed they will need to be reconstructed.

When do should a Policyholder know if underinsurance applies?

Decisions need to be made regarding the extent of property reinstatement and the loss mitigation measures. The Policyholder needs to know the extent of cover and the application of any underinsurance penalty at the earliest opportunity after a loss.

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Author

Published with permission of Claim Solutions Pty Ltd.

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Insurance Policy

Country: - Austrlalia

Policy Description: - Mark IV Industrial Special Risks policy and many Composite or Businesspack policies

Insurer: - Various.

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