Under-insurance of high-tech homes puts householders at risk

17 Jul 2013

Increasing numbers of high-tech homes are under-insured, putting householders out of pocket in the event of loss or damage.

Rossborough is warning homeowners that not updating valuations for building and contents insurance after renovations, improvements or the purchase of expensive equipment will lead to being under-insured which could affect the amount received in the event of a claim.

'Most insurance companies will index link the sums insured at every renewal to keep up with the cost of living and that goes some way to ensure that people aren't under-insured but that won't be enough if the value of your property or your contents has increased dramatically since you first took out the policy and that is a considerable risk to take,' said Rossborough Guernsey director Tony De Sousa. 

'If you are under-insured on your buildings' insurance, in the event of a claim the insurers will apply average. This means that if for example your buildings are only insured for half of the actual amount, the insurers will only pay out 50% of the cost of the claim.'

A recent survey by Aviva of five million properties for sale in the UK revealed that 257,000 were described as having a "high spec interior" and of those 63% had under-floor heating and over a quarter had quality finishes such as granite work surfaces and marble flooring.

'High spec interiors are becoming increasingly popular, especially in a relatively affluent place like Guernsey but they are also significantly more expensive to replace or repair if something goes wrong,' said Mr De Sousa.

'Problems arise when home improvements are carried out but policies are not upgraded accordingly so it is important that people remember to let their insurers know when things are upgraded or replaced.'

Buildings insurance should cover the cost of rebuilding the property. This should include costs such as demolition, clearing the site and architects' fees. Contents insurance on the other hand covers all items that are not permanently attached to the structure of the home.

Mr De Sousa said that contents insurance covers free-standing kitchen and bathroom appliances, as well as household goods and other articles in the home or its domestic outbuildings, garages or greenhouses.

'The sums insured should cover the full cost of replacing your contents as new, not just what you paid for them. I think most people would be genuinely surprised at the value of what they have in their homes as they often look at the bigger items and forget smaller items or underestimate just how much it would cost to replace say their whole wardrobe, kitchen utensils, cutlery and crockery or audio-visual equipment,' he said.

'One of the easiest ways is to go into each room and use a contents calculator to add up what you have or speak to your broker who can give you more advice.' 



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