With the winter months setting in and the weather worsening, there really is no better time to check your insurance schedule to make sure everything’s up to date. The colder months herald a host of weather-related issues which can hamper or shut down settings, including burst pipes, flooding and storm damage.

As a nursery owner, are you guilty of paying your insurance renewal year on year without taking the time to check you’re adequately covered? If so, you could be underinsured.

Let’s take the scenario of a flood and say you had £50,000 of contents but were only insured for £25,000. You need to submit a claim to your insurance company for £10,000 to replace all the damaged items and you think, “That’s OK, even though I’m underinsured the company will still pay me the £10,000.” Wrong! If your insurer applies an average clause, you’ll only receive £5,000.

An average clause means that if your sums insured cover is inadequate, the insurer can reduce its liability for the claim by the same proportionate amount. So, if you were underinsured by 50%, then they can reduce their liability by 50% and only pay half.

This will also apply, for example, when it comes to submitting a claim for loss of revenue whilst your nursery gets back on its feet. If your nursery has grown and you haven’t updated your insurance schedule to reflect an increased amount of revenue, the average clause will apply again.  So, when you come to submit your claim for loss of revenue and your monthly income is £50,000, you’ll only receive half that amount.

Regardless of whether your insurance renewal is due yet, you can make a change to your sums insured at any time throughout the year. Consider your insurance schedule very carefully and seek advice from an accountant or your insurance company for a more accurate idea of what you should be covered for. For the sake of a relatively small increase in your premium, you can buy peace of mind that you’ll be fully covered should you ever need to make a claim.

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