A local hurling trainer used to tell us, that a clap on the back is only ever six inches from a kick up the……….I’ll let you all figure out the end of that one for yourselves. Catastrophising is to constantly imagine the worst case scenario in everything you do, not really a heathy disposition for anyone and definitely not something Allianz are trying to encourage. However when things are going smoothly there sometimes comes a time when a reality check is needed in order to avoid the proverbial kick my trainer regularly referred to.
From a schools perspective, a simple “catastrophising” exercise could look like imagining the school is damaged beyond recognition by fire and is a total loss. Imagine the heartbreak for the pupils, staff and local community to have to realise such a scenario. It doesn’t feel nice to say the least and you could think that’s as bad as it gets. Unfortunately this situation can be exacerbated if you don’t have your property adequately insured and therefore may not be entitled to the required settlement amount to rebuild the school as is. Underinsurance of your buildings and contents may also result in the average clause being applied to a claim. In practice this means that if your sums insured are set less than 75% of the actual rebuilding/replacement cost then any claim payment may be proportionately reduced.
This is a difficult message for Allianz to express as we never want to instigate concern amongst schools and school leaders but the reality is, it is an essential message especially in a time of rising building costs. Your schools Board of Management are responsible for setting the sums insured and for an accurate assessment and we recommend a professional valuation is obtained from a chartered quantity surveyor. Allianz can also assist in providing an indicative sums insured assessment for your school using our internal valuation tool. It is important to point out that this is not a professional valuation but will provide an indication to inform your Board of Management’s decision when setting your sums insured or deciding to seek a professional valuation.
Our recommendations is that your Board of Management should consider the sums insured at every renewal and decide if they need to undertake a sums insured review. Some of the main factors that require consideration include:
- New Extension/Development
- Addition of a Building/pre-fab
- Removal of buildings/pre-fab
- Period of time since last review
The first 3 points above are pretty self-explanatory…..has the school completed a building project, made a purchase of a shed or pre-fab or indeed removed a pre-fab or shed. Very simple yes or no questions to be asked. The fourth factor requires a bit more consideration and understanding.
Your sums insured, in order to be adequate, must cover the cost to rebuild or repair the buildings and replace contents as new at that period in time. As we will have all seen over the past few years the cost of building has increased considerably, year on year. The Society of Chartered Surveyors of Ireland (SCSI) Tender Price Index September 2020 outlines that since 2011 national construction tender prices have increased by circa 58%. In the most recent 5 year period 2016-2020, tender prices have increased by circa 34%, highlighting that rebuilding costs continue to increase at speed. Further uncertainty remains regarding the true impact of Brexit considering the pandemic restrictions on construction to date.
Your schools Board of Management need to consider when they last reviewed the sums insured and the potential for a gap between the current sums insured for the school and the actual rebuilding costs. As mentioned above Allianz are very happy to assist in this regard by providing an indicative sums insured assessment for your school using our internal valuation tool. Our valuation tool has been developed in conjunction with a reputable quantity surveyor company that have experience in the Education sector. This uses the latest Department of Education & Skills “Basic Building Cost” as the basis for our rebuilding cost advice.
Allianz’s sums insured assessment, while based on sound information with professional input, is an indicative sums insured. We are confident that it is reliable and accurate however we do recommend schools obtain a professional valuation from a chartered quantity surveyor at some point in time.
Similarly the board need to consider the contents sums insured. In general schools set their sums insured somewhere between 10% - 15% of the buildings sum insured, usually dependant on the amount of ICT equipment they have. If your school has concerns regarding their contents sums insured we recommend that an inventory of your contents is carried out to get an accurate understanding of their value.
While at present our local Allianz representatives are restricted to essential site visits only, we have adapted to complete remote sums insured reviews where possible. Once public health guidelines allow we will be more than happy to recommence School visits and assist you in person. Please contact your local representative to discuss further and arrange a remote assessment now or a physical one in the future. If you are insured through an intermediary then please contact them directly for assistance.