Commercial property owners may be putting their investments at risk from underinsurance by failing to maintain their sum insured at adequate levels and the problem is set to rise as the country exits the recession, according to Aviva .
The sum insured is the amount it would cost to rebuild the property in its entirety and should include the costs of removing debris, as well as the fees of architects and surveyors . The insurance premium charged is linked to the sum insured.
Mark Dunham, commercial property underwriting manager at Aviva, said: “Although the recession has led to significant reductions in the market values of buildings in terms of what they can be bought and sold for, rebuilding costs have not reduced to the same degree. In fact, as we come out of the recession, the cost of reinstating a building is anticipated to increase as the demand for raw materials, energy and labour rise.”