Setting Sums Insured on Village Hall Insurance Policies
Setting the sums to be insured on a Village Hall insurance policy is one of the most important tasks to be undertaken by a hall committee. It is essential that buildings and contents are not under-insured or there could be a problem in the event of a claim.
The reason for this is that insurance policies usually contain an “Average Condition”. This means that any claim payment will be reduced by the proportion that the property is under-insured.
Let us consider an example where the true replacement value of the contents of a Hall is £30,000, but the sum insured is only £20,000. In other words, it could be considered that only 2/3rds of the contents are being covered. If there were to be a kitchen fire damaging goods worth £6,000, insurers would only pay 2/3rds of this amount – i.e. £4,000. They do this to reflect the fact that the policyholder is not contributing the correct premium to the fund from which claims are paid.
The situation is compounded where it is a large buildings claim. The sum insured on the buildings should be based upon the rebuilding value for the existing type of construction. It is not sufficient to say that the property would be rebuilt using modern materials and cheaper methods because the damage may only be partial and Average would apply if the sum insured were too low – reducing the settlement figure.
Setting this rebuilding value is very difficult. The only accurate way is to get the opinion of a surveyor or, as a cheaper but perhaps less accurate option, a local builder. Once the figure is set then insurers are likely to apply index-linking to the figure, so keeping it up-to-date.
Some insurance brokers offer a service whereby they survey the Hall and help you set the correct rebuilding value.
This is often provided free of charge and where you alter your sum insured to meet the valuation, insurers will usually guarantee that any future buildings claim will be met in full, even where the valuation proved to be too low.
As a general rule-of-thumb figure, a rate of £1,750 per square metre will give you an indication as to whether your sum insured is somewhere near the right figure. This assumes that the construction is modern brick and tile but this calculation can only provide a rough figure – you will still need to speak to a surveyor or a builder!
Setting the contents sum insured is a much more straightforward job. You simply have to add up the replacement value of everything in the Hall! This should include stage curtains, tables, chairs and equipment in the kitchen other than fixtures. Don’t forget to add in the value of groundkeeping equipment – although tractor mowers may need to be separately covered and you should notify your insurer or broker of such items. You cannot decide which items to insure and which to leave uninsured otherwise you could fall victim to the application of Average, as explained above.
It is usually possible to obtain cover for equipment which belongs to hirers. However, you must provide a separate value for such contents and tell insurers of their existence. If the hirer has their own insurance – as a play group, for example, inevitably will – then it is more appropriate for those contents to be covered by the hirer’s policy.
If you have contents which are used away from the Hall – a marquee for example – you must notify your broker or insurer as the cover will not normally apply automatically.
The important message is to tell your insurer or broker about anything out of the ordinary. They will be able to advise you accordingly.