We’re all doing our best in the challenging circumstances that the Covid-19 pandemic has brought about. Many of us are also finding that we have more time on our hands than usual and are tackling chores that have been on the “to do” list for some time, such as clearing out the spare room, sorting out the garden or home DIY (where we have the materials and tools to do so!).
Maybe now is also the time to look at financial matters and check that everything is in order.
Reviewing the cover your home insurance provides can be an important exercise to make sure you have the right sums insured to give the protection you need.
Being underinsured is a common issue when it comes to home contents insurance.
The value of items such as jewellery, watches, art, wine and classic cars have increased over the years – but does your home contents sums insured reflect the current values?
Many of us have garages, attics and outhouses full of extras that get missed when assessing our contents, such as bikes, tools, and skiing, camping, sporting and gym equipment.
If your home insurance doesn’t have the right sums insured, your insurer can reduce any claim made via the level of your underinsurance – commonly known as ‘the average clause’.
An example of how the average clause could affect you:
- You have £50,000 of home contents insurance cover.
- The actual value of your contents is £100,000 – therefore you are only insured for 50% of the true value.
- An escape of water/burst pipe causes damage to your property and you claim for £20,000 of damage. As you are underinsured by 50% it is likely that your insurer will only pay out 50% – i.e. £10,000. This means you could end up £10,000 worse off.
It is therefore crucial that you regularly review the value of your home contents and make sure your sums insured are updated accordingly.
To help you with this try our easy to use home contents inventory calculator.
And it’s not just your home contents that could be underinsured – check your buildings sum insured
One of the main reasons for a buildings sum insured being too low is that the amount of cover is often taken from the mortgage valuation. However, this is a mortgage valuation – not an insurance valuation which needs to reflect the cost of reinstating the building from scratch.
There are many factors that affect rebuilding sums insured, including age, type of construction, whether it’s a listed building, location, refurbishments and extensions that have been carried out.
Add to that the fluctuations in the cost of building materials and professional fees, such as architects and surveyors, and it’s very easy to become underinsured.
Not all home insurance policies are the same
Home insurance cover has changed significantly over recent years and can now include a range of additional benefits.
Some providers offer home cyber cover, which is perhaps particularly relevant right now as many of us are working from home and means that our personal computers and home network are at greater risk of a cyber attack.
Other benefits that can now be provided include:
- ‘All Risks’ worldwide cover, including theft, accidental loss and damage.
- Specified cover for individual items guaranteeing you a speedy settlement, without quibble, following damage or a loss.
- Cash or replacement option allowing you to replace an item with something similar from your own supplier or keep the full cash settlement.
- Cover for second/holiday homes – in the UK and abroad.
- High single article limits for valuables including jewellery and watches.
The best way to make sure you have the right home insurance cover in place is to speak to an expert.
Private Client Director