Why proper insurance is essential for garden centres

Seek expert advice, insure for cost of rebuild and regularly update policies.

Worst-case scenario: garden centres advised to take advice from insurers and review their insurance every year - image: Pixabay
Worst-case scenario: garden centres advised to take advice from insurers and review their insurance every year - image: Pixabay

Garden centres should seek advice from insurance companies and insure for what it would cost to rebuild the garden centre. Simon Quinton Smith, director of chartered surveyor Quinton Edwards, believes that most small and old garden centres are underinsured.

Paresh Raithatha, the owner of Ansell Garden Centre, which burned down in November 2016, agrees. He estimates that around 70-80% of garden centres are underinsured. Both point out that garden centres need to insure for the cost of a rebuild on the site and not for the cost of the original building.

Higher insurance value

Quinton Smith says: "An old garden centre may have initially been insured for £2.5m but to build a new garden centre on that property could be as much as £4m. The bank will not give you the extra money for that if you are underinsured."

He adds: "If buildings surveyors say it will cost £100 a foot to rebuild, I go on what they say. This means that a cost of replacing an older garden centre is more than it's worth. If a garden centre is 40,000sq ft that's £4m before you even start looking at the car park or planteria so it could be as much as £6m in total."

Raithatha found out he was underinsured and believes it is important that his story is heard as a cautionary tale to other garden centres. He lost 100% of the building and 98% of the stock in the fire. It happened in a peak week when the centre was preparing for Christmas.

"You should insure the property not based on the value you would sell the business at but for how much it would cost to rebuild everything," he says. "The value you insure for the building doesn't necessarily cover all the extras and utilities like the fencing and the car park."

Quinton Smith recommends garden centres seek advice from insurance companies and review their insurance every year. "You are paying for a safety net," he says. "Everybody should take advice from an insurance company and find out what the insurance should be for their property. It is better finding out you are underinsured if the worst-case scenario does happen and your garden centre has a fire, like Ansell."

Responsibility is "on the brokers to give the right advice to garden centres", says Raithatha. "They have a duty of care to make sure we are properly informed." Ansell Garden Centre used an insurance company recommended by the HTA before the fire. Raithatha and Quinton Smith agree that garden centres should not avoid properly insuring their property because of increased premiums.

Quinton Smith says: "The trouble is premiums don't go up accordingly. Garden centres don't want to reinsure because they don't want their premiums to double. Garden centres should take advice from an insurance company and seriously think about updating the insurance every year."

Demolition work is under way at Ansell Garden Centre in West Drayton but the business remains open. "We are still trading in Portakabins," says Raithatha. "The week before last we took 55 per cent of our normal turnover."

Garden Retail Summit - Owner explains rebuild strategy in place for Ansell Garden Centre

Speaking at HW's recent Garden Retail Summit, Paresh Raithatha, the owner of Ansell Garden Centre near Heathrow who lost all his stock and 100% of his building in a fire last November, explained his rebuild strategy.

The centre sold 1,000 Christmas trees from a Portakabin last year. The formal rebuild will take until March 2018, with a Christmas shop hopefully open for business later this year. "Our strategy will still be very plant-focused," he pointed out. "We did have a coffee shop. It wasn't very big but it was always packed out."

Focusing on ingraining friendly - not pushy - politeness in his staff paid off when customers heard the news, said Raithatha. "We had 65,000 well-wishers on Facebook. We had 600 mince pies in the office at Christmas. It was absolutely crazy but lovely."

Dealing with insurance has been an eye-opener, he added, and he estimated that 70-80% of garden centres do not have proper insurance cover.

Simon Quinton Smith, a director at chartered surveyor Quinton Edwards also speaking at the summit, agreed. "Most small garden centres are underinsured."

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