80% of sports clubs could be uninsured, is yours?
Unfortunately underinsurance is fairly common in the sports club insurance sector. Many businesses are at risk of losing out in the event of a fire, theft or flood, having to pay out from their own cash reserves because their sums insured is not up to date.
According to Allianz, up to 80% of the 4.3 million SMEs currently in operation in the UK are estimated to be underinsured. Here’s what underinsurance means for sports clubs and how best the risks can be managed or stopped.
What is underinsurance for sports clubs?
Underinsurance is dictated by the valuation of your club (in the event of rebuild) and your sums insured, which is how much your policy insurers.
If the valuation of your club, clubhouse or contents are higher than your Sums Insured, then your insurer will use The Rule of Average to calculate your payout. Your insurer will not pay the full sim insured, that amount will be divided by your valuation. You’ll then be left to cover the rest of the cost of the claim yourself.
To learn more about the implications of being underinsured, see here.
What are the implications of being underinsured for clubs?
You should have a maintained inventory of all machinery, equipment and stock stored on your premises and let your insurer know if there are any significant changes that could affect the total you’re insured for.
What’s causing my sports club to be underinsured?
There are many reasons why your club may become underinsured:
- If you have used the same insurer or broker for several years, then it is likely your sums insured has not been updated. Auto-renewing is dangerous and has a high likelihood of leaving your club underinsured.
- Valuations being based on the sale price of the facility, and not the rebuild cost.
- Business interruption also needs to be accounted for when considering the full cost of a fire or theft. This cost should be included in the valuation of your club as to not leave it out-of-pocket for a period of time.
- Building valuation increases have caused past valuations to be outdated. Considering labour and material costs, there has been nearly a 40% increase in building values over the past five years.
- Mismanagement has resulted in financial losses for clubs, as well as lack of security and risk awareness procedure.
- Business interruption needs to be accounted for
- Inflation has cause materials to rise in price, this will affect your building’s rebuild valuation. It will also effect the value of your contents, therefore you should get your content insurance assessed by a professional.
- The temptation to save money on behalf of irresponsible brokers, at the risk of gaps in cover.
Club chairmen or leadership teams need to consider how close their club is to this scenario. All chairmen should be taking steps to manage the risk of underinsurance.
What key steps can club chairmen take to reduce the risk of underinsurance?
There are a few quick things club managers and leadership teams can do to manage the risk of underinsurance:
- Check your renewal date and contact your broker.
- Talk to other specialist brokers, arrange a confidential review of your cover and engage competition.
- Read and review your policy and see if it still aligns with changes that have been made.
- Identify gaps in your cover, perhaps you’ve made a large recent purchase, bring these questions to your broker.
- Make notes and questions and bring them to Club Insure, and expert will freely offer you advice on your policy, security and risk management.
Talk to Club Insure to stop Underinsurance
The best way to manage your risk of underinsurance is to talk to Club Insure, the UK’s number one club insurance broker.
By getting to know you, we gain a deeper understanding of your individual circumstances and the cover you’ll need to protect your organisation and its people. We will visit your club and provide guidance on the individual risks you may face.
We are a team of highly qualified account executives and handlers, as well as an expert claims department and diligent risk management specialists. Club Insure offers a range of services which will help clubs to reduce claims, improve their record, save time and ultimately save money.