Tennis club insurance – Under-insurance is a real cause for concern for all tennis clubs
• 2 MINUTE READ
Under-insurance is endemic in volunteer-run sport clubs, and clubs are receiving little guidance from those who are handling their insurances.
The Insurance Act 2015 puts the onus on the clubs to make a Fair Presentation of Risk including rebuilding costs, so if a club under-insures then they must bear the consequences in the event of a claim. This places committee members in a precarious position.
How would your club fare in this scenario?
You have insured your property for the last five years with the same insurer, and have not reviewed your sums insured, even when prompted. Your pavilion is insured for £500,000, which the committee agree is adequate even when insurers are suggesting index linking, and another broker has suggested that it would be prudent to get a valuation survey.
Unfortunately, there is an electrical fault at the pavilion, and a major fire ensues. The fire brigade put out the fire, but the damage to the pavilion is so great that it will need to be demolished and rebuilt.
The loss adjuster from the insurance company attends promptly but advises that the current rebuilding cost is likely to be £1,250,000. He then asks if the committee had considered a review of the sums insured or had received any advice on the subject. The conversation with the broker is recalled and his suggestion to undertake a valuation survey.
Insurers report back that the maximum loss payable would be £500,000, but they are concerned that the committee were informed that they were under-insured but chose to renew their insurance policy without revising the sums insured.
Insurers argue that this falls short of the Insurance Act 2015 requirement that the club make a Fair Presentation of Risk, and state that this gives them the right to void the policy from inception.
The club start getting quotes for demolition and removal of the debris and find that this along with the cost of an architect plus planning permission, is likely to cost them over £200,000. Contractors’ quotes to rebuild are over £1,000,000. The club cannot afford to rebuild and face an extended period operating out of temporary buildings.
How close is your club to being the one in this scenario?
If you combine the increases in labour and materials, there has been nearly a 40% increase in building values since 2020, and club officials have struggled to keep up with the sums insured required to reinstate their facility. It is a potentially serious situation – mismanagement resulting in personal financial loss for people running clubs, not to mention the effect that a large financial loss could have on the club’s sustainability.
As a specialist sports club insurance broker, Howden want to offer clubs and their committee members’ peace of mind.
Our recommendation would be to speak to Howden to get a professional valuation survey so that you can see likely reinstatement costs, and then increase your sums insured accordingly.