Out of every ten industrial policies we review, seven have the building insured below its real reconstruction cost. It is not the client's negligence: the capital was set once and no one looked at it again.
What exactly is the proportional rule
Article 30 of the Insurance Contract Law establishes that if the insured sum is less than the value of the interest, the insurer will compensate the damage in the same proportion. The arithmetic is relentless: a warehouse that costs €2,000,000 to rebuild and is insured for €1,000,000 receives 50% of any claim, even small ones. A partial fire of €400,000 is settled with €200,000.
Why the capital falls short without anyone noticing
Three causes explain almost all cases. The first is the passage of time: the capital was set with the construction cost of the year of purchase and building costs have strongly appreciated. The second is the machinery added later and never declared. The third is stock valued by its annual average in businesses where the campaign triples the stock, so underinsurance is maximum just when the exposure is also maximum.
How to correctly calculate the building capital
By reconstruction cost, never by market value or cadastral value. The land does not burn. To the building, you must add demolition and debris removal, technical fees, licences, and the extra cost of building on an occupied site instead of a free one. For risks above one million euros, we recommend prior appraisal agreed with the insurer: it eliminates the discussion about underinsurance on the day of the claim, which is exactly when the company has the least negotiating capacity.
The clause that deactivates it
There is the waiver of the proportional rule, also called at total value or at first risk depending on the modality. It increases the premium, but in risks where the capital is difficult to set precisely, it is usually the correct decision. It is advisable to request it expressly: almost no standard policy incorporates it by default.
