Making an Insurance Claim

4. Potential Pitfalls

Your claim may not be met in full. It may even be completely rejected. Unfortunately you will only ever discover that your insurance was inadequate when you come to make a claim.

In order to make the most of any claim after the event, there are a number of things you should check when placing your insurance cover.

4.1 Check that you comply with your insurer's terms and conditions.

• Did you meet the disclosure requirements? For example, failure to declare past burglaries or other relevant facts could lead to your claim being rejected.
• Did you meet the security and safety requirements? For example, switching on your burglar alarm, keeping the premises secure and keeping cash in the safe.

4.2 Check that you are not underinsured.

• Are your buildings, equipment, assets or profits insured for the correct amount? Your claim will be reduced in proportion to the amount you failed to insure for.

4.3 Check that you will be paid the full replacement cost, known as 'reinstatement'.

• Insurers will pay either a cash amount equivalent to replacing the damaged or destroyed property 'as new' or pay for work to be carried out to bring the property back to its original condition. In both cases, the amount paid will not exceed the sum insured.
• Most policies have a 'betterment' clause which excludes the full cost of replacing lost or damaged assets with better ones. For example, replacing your six year-old printing presses with two (much better) new ones. This is betterment and you may have to pay towards the cost of the upgrade.
• You may have to adjust your insurance cover to replace equipment that becomes obsolete rapidly, such as computers.
• Replacing equipment that is no longer available can be a major problem.

4.4 Check how much you must pay towards each claim - the policy 'excess'. For example, you may have to pay the first £1,000 of any claim you make.

4.5 Check that you are following the correct claims procedure.

• Notifying your insurer of a loss does not automatically mean you can undertake repairs, or buy replacement items, or remove any remains or damaged goods. You may be removing the evidence. Agree everything with your insurer first.