The Problem of Underinsurance
11 Nov 2013
According to the Association of British Insurers latest guide on buildings and contents insurance, research shows that one in five households could be underinsured because they did not know how much their home contents were worth. Under-insurance can cause serious problems if you have to make an insurance claim, as your insurance company may not pay out the full cost to replace lost or damaged items.
Why is it so easy to underestimate your buildings sum insured?
Analysis by Aviva of over 5 million properties for sale in the UK reveals that 257,000 homes are now described as having a "high spec interior". The findings show that the most common high-end feature listed by estate agents is under-floor heating (mentioned in 63% of the 257,000 high spec homes analysed) while over a quarter (27%) boast of quality finishes such as granite work surfaces and marble flooring.
Other high spec features noted include ceiling speakers (2%) and luxury fitments such as walk-in wardrobes and built-in entertainment centres (1%). Premium brands are also important, with 2% of high spec homes listing either Smeg or Miele appliances as part of their marketed qualities.
These statistics will easily travel across to Channel Island homes. So when you are opting for marble flooring, walk-in wardrobes or high end appliances, tell us so you can be certain that you have the right cover to adequately protect everything in your home.
Hiscox have specifically highlighted contents as one area that often gets forgotten:
Austyn Tusler, household insurance expert at Hiscox, comments:"Our research shows that the British are dedicated followers of fashion. However, many don't have a grasp of the value of the clothing and accessories they have accumulated over the seasons.
"As a result many people may be underinsured when it comes to their wardrobes and, as quite often is the case, they could be underinsured when it comes to the rest of their household contents too. One female customer for example gave us an estimate of around £3,000 to cover her wardrobe contents but, once we had reviewed it with her, the total was actually more than £25,000 - over eight times the value she had thought.
"When people consider their wardrobe, many think only of the current pieces they wear each season, rather than taking into account the wealth that has mounted up over the years. Other items such as high tech performance sportswear and outdoor clothing can also significantly increase the value, yet one in five (20%) admit they don't know how much their sportswear is worth. It is important that people spend a bit of time totting up the costs of replacing their items to make sure their full wardrobe is covered. That way, in the unfortunate event that they have to make a claim, they will have enough insurance cover to bring their wardrobe back to its fashionable best."
So if you think you may need to review your own buildings or contents sums insured, make sure to contact your broker at Rossborough Private Clients and we will be happy to assist you.