How underinsurance nearly put a beloved pub at risk

The scenario

At the end of  another busy day at The Flying Fish, the team began their usual closing routine, preparing for the next day. Part of that process included washing and drying the kitchen linen – a task that was carried out daily without incident. But, on this occasion, what seemed like a simple chore almost sparked a devastating fire.

Read more.

The challenge

The pub owner reported the incident to their insurer, which appointed a loss adjuster and forensic specialist to investigate. During the claim review, the loss adjuster assessed whether the sum insured was sufficient to cover full reinstatement costs – typically including demolition, site clearance, materials, labour, and professional fees.

The Flying Fish’s cover was based on market value rather than reinstatement cost, leaving the property significantly underinsured. Loss adjusters calculate reinstatement value using industry-standard data and RICS guidance, applying a cost per square metre for the property type. This makes their valuation difficult to dispute.

Had the fire spread beyond the tumble dryer room, the damage could have been severe – and the insurance would not have fully covered it. Underinsurance triggers the Average Clause, meaning the insurer pays only a proportion of the claim. For example, if a property insured for £500,000 has a reinstatement value of £1,000,000, only 50 per cent of any claim is covered. A £10,000 storm damage claim would therefore be reduced to £5,000 before policy excess deductions.
 

The solution

Following the loss adjuster’s evaluation, the client was referred to Barrett Corp Harrington (BCH) who carried out a cost effective desktop valuation. This found that the market value, declared by the pub owner, only represented 30 per cent of the reinstatement value.