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16-11-2012

Avoid under-insurance

A couple of weeks ago, we wrote about the biggest insurance mistakes we come up against when helping clients with their insurance claims. At the top of the list was ‘under-insurance’ – and we put it top for a very good reason. It’s bad enough to suffer a loss: but it makes everything so much worse if you’ve been paying your insurance premiums and then discover you’re not fully covered.

The problem is widespread: according to the Association of British Insurers, one in five households could be under-insured because they don’t know how much their possessions are worth. But it’s not just householders who face this problem: we’ve often had to help business people who are under-insured.

For example, a very successful landlord in Hampshire saw one of his properties – which housed two restaurants and five flats – burn down. When he looked at his insurance policy, he realised his cover was much lower than the cost of reinstating the building and replacing lost contents. We helped him with what was a very difficult and delicate claim, and he recouped as much as he could under the terms of his policy. But, most importantly, he immediately reviewed his insurance cover across all of his properties to make sure he never faced the problem of under-insurance again.

Insurance company Hiscox has listed some very useful advice on its website which we think summarises very well the steps you should take to make sure you’re not under-insured:

  • Dig out your insurance documents to find out exactly what level of cover you have.
  • Calculate your contents to make sure you haven’t under-estimated their value.
  • Check all your possessions are covered: if you’re unsure, talk to your insurance broker.
  • Count the cost of a rebuild: this is a key area for under-insurance, and there are some useful tips for how to make an accurate calculation.
  • Keep your insurance up-to-date: remember to review every year.

You can read the full details by visiting http://www.hiscox.co.uk/personal-and-home/useful-information/under-insurance/

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