Do you need help setting your Sums Insured?
In order for your product to operate effectively, it is essential you set your cover at the right level.
Nursery contents
You must establish exactly how much it would cost you to replace the entire contents of your business (as new) and insure for this amount. Do not forget to include the contents of any standard construction (built of brick and/or stone and roofed with slate or tile) outbuildings and outside fixed play equipment when setting the initial level of cover. You will also need to tell us if you are storing equipment in a non-standard construction outbuilding (i.e. a wooden shed) as this will not be covered automatically by your policy.
Buildings
If you are looking to insure the building under your policy then your sum insured should represent the current re-build value (not market value) and include an allowance for a range of things, including (but not limited to) architects’ and surveyors’ fees, demolition and debris removal costs, building regulations, changes in the law (i.e. compliance with the Disability Discrimination Act), landlord’s fixtures and fittings, outbuildings, boundary walls, drives and footpaths.
We cannot advise you on the appropriate sum insured to select for your building, but we do recommend that you have the building professionally valued for insurance purposes at least every three years.
Gross fees
Knowing how to arrive at an adequate sum insured for Gross Fees has always been an area of concern for our clients. At Pound Gates we aim to take the worry away from Early Years businesses by providing a standard Gross Fees sum insured of £500,000 with a 12 month indemnity period. This limit can be increased and the indemnity period expanded to cater for all sizes of nurseries. To help, we have created a simple formula (see below) you can use to work out what your Gross Fees sum insured should be and to work out whether our standard limit of £500,000 is adequate for your business.
This Gross Fees figure should then be adjusted to reflect for the forthcoming financial year / insurance period:
- anticipated business growth
- inflation
For example, you may forecast that your business will grow by 15% during the next year. Inflation might be running at 5%. Taking into account these figures, the £390,000 Gross Fees figure shown in the example below, would become an annual Gross Fees sum insured of £471,000 (rounded up).
Finally, you should adjust the annual Gross Fees sum insured to reflect your chosen indemnity period. The indemnity period represents the maximum period over which the business could be affected by the occurrence of loss or damage. If you were to suffer a large claim, which interrupted or temporarily closed your business, how long would you anticipate the recovery of your business to its position just prior to the loss? Our product comes with a standard indemnity period of 12 months. We can increase the indemnity period to 18 months, 24 months or even 36 months, should you require. If you select an indemnity period greater than 12 months, you will need to increase your annual Gross Fees sum insured to reflect this in accordance with the formula below.
If you require further assistance in setting your sums insured, we can provide you with details of a valuation service provided by Quest Gates. For a fee (payable separately to Quest Gates) they will visit your premises and provide you with accurate insurance valuations in respect of your buildings, contents and gross fees. If you would like further information on the Quest Gates service and costs get in touch with a member of our team.
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