Material Damage Insurance

Ask anyone to imagine the worst catastrophe that could affect their business and fire would probably be the first thing that came into their mind.

Consider this, it is unlikely that a theft, loss of money, or glass breakage would ever threaten the future of your business. Yet a serious fire with the resulting loss of premises, custom, and immediate cessation of income, would rock the very foundations of your enterprise.

The comic writer Terry Pratchett once said that the only problem with unimaginable horrors is that they are all too imaginable. Material Damage Insurance is where those nightmares are laid to rest.

Years ago insurers called this insurance Fire and Special perils, but over the years they added perils such as Accidental Damage and renamed the section Property All Risks. Now they seemed to have settled on the phrase Material Damage.

Cover became so wide that they increased the excess to £250 to save upon the high cost of trivial claims and to encourage the policyholder to take more care. However competition for business has forced some insurers to review this stance and excesses of £100 are now available.

Another development was the arrival of reinstatement cover or "New for Old" as its better known. This was a huge benefit to policyholders because Insurance is a contract of Indemnity - in other words it puts the policyholder back in the same position that he enjoyed prior to the claim.

Now after a serious claim, the policyholder may benefit from a complete refurbishment without having to contribute to the cost!

However please remember how vital it is to insure for the correct amount. If you underinsure the company has the option to reduce the payment in the proportion that the underinsurance bears to its correct value. Your valuation must take into account the full cost of rebuilding.