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COMMENT eeping pace with your true value by Leighton Chenery Avoid the pitfalls of underinsurance Wandering around IBC, marvelling at the latest technical advances and innovations and viewing the major strategic themes for the future direction of the Broadcast & Media industry, it would be easy to overlook the importance of adequately insuring new purchases and additions to your business. Why didn’t I get paid in full? If your current equipment has been undervalued on your policy and you suffered a loss or damage the ‘Average Clause’ will apply. Underinsurance is the main cause of claims not being paid in full by the insurers. Your cover, like most commercial insurances, is subject to a ‘Condition of Average Clause’. This means that, if you insure for less than the true value of your equipment, your claim would be reduced in proportion by the same percentage. Let me give you an example - your property is worth £100,000. You insure it for £50,000. You suffer a loss of £10,000. If your policy is subject to ‘Average Clause’, the maximum amount that you may recover will be £5,000. Understand your cover To avoid the above scenario it is crucial to fully understand the basis of your cover. Most policies will be on a ‘Reinstatement’ or ‘New For Old’ basis, meaning that the sum insured needs to refl ect the cost of replacing your kit with brand new equipment even in circumstances where the equipment has been bought second hand. Often the original cost of the equipment, when it was fi rst purchased, is used for the basis of your sum insured but this may have been many years previously and the cost for new versions may be much higher. Similarly, some equipment will be insured for the value after depreciation has been deducted from the original cost, so it is easy to see how problems can arise in this situation. If you have no intention to replace certain items of equipment with brand new ones it is possible to arrange a cover for these items on an ‘Indemnity’ basis. Essentially, it would allow you to insure for the second hand value and your insurance would refl ect the cost of a second hand replacement. 42 | KITPLUS - THE TV-BAY MAGAZINE: ISSUE 106 OCTOBER 2015