Home Insurance Advisers - Macbeths Insurance Brokers

Are You One of the UK’s Many Under-Insured?

One in five households across the UK have insufficient insurance cover, meaning 20% of homeowners are likely to be out of pocket if they have to replace their possessions due to theft, loss or damage.

However, this statistic from the latest underinsurance research by the Association of British Insurers is nothing compared to a recent report in the Financial Times concerning wealthier British families.

“Many wealthy households are exposing themselves to potentially huge losses by holding inadequate contents insurance,” stated the article, which quoted research from NFU Mutual revealing that in high-value properties valued by the insurer in 2014, on average, cover was in place for only 25 per cent of their total contents by value. Among the properties valued, one seven-bedroom house in East Sussex was found to have existing cover of £2,381 for contents valued at £199,619.

It is surprising that such households, many of which will contain expensive antiques, art and fine wine, tend to be so underinsured, particularly when they are likely to be more prone to burglary and theft. However, both studies reveal that underinsurance is a common problem, and one that needs addressing.

In many cases, the additional cover required would be unlikely to increase premiums by much, and this would certainly be a small proportion of the true value of the items insured. So now could be the time for you to check that you’re not underinsured.

Bear in mind that many heirlooms and domestic furnishings have risen in value over the past few years. For example, the Financial Times points out that the value of gold has risen significantly over the past five years, notwithstanding steep falls in 2014. And remember that the cover you have should reflect their current value or you will have to pay out personally to replace them.

Here are five steps to take to check your home and its contents are adequately covered:

1. Find out what of cover you currently have for your buildings and contents:

Track down you documents and call your insurer if you need more details.

2.Calculate the value of your contents:

It’s easy to under-estimate the value of your contents and possessions, so make sure you check current prices and get your more treasured possessions professionally valued – even those heirlooms that look low in value. There are online contents value calculators you can use.

3.Check all your possessions are covered:

Some home insurance policies don’t cover art, antiques or collectables, or items of high value, or the insurance company may require you to list these separately. Make a list of anything you’re not sure about and ask your insurer if you’re covered.

4. Work out the cost of a rebuild:

When you get a quote for home insurance, you may be asked to specify a ‘rebuild cost’  – how much it would cost to completely rebuild your home, including materials and labour. Make sure you get this right, as it is prone to underinsurance. The Association of British Insurers has a useful buildings rebuild cost calculator to help you do this.

5. Keep your insurance up to date:

Review your buildings and contents insurance cover at least once a year, perhaps when you receive your buildings and contents insurance renewal notice.

Author: admin | January 6th, 2015

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