It’s difficult enough to cope when disaster strikes at home, but to learn your home or contents have been under-insured can be heart-breaking and could have serious financial consequences.
Most homeowners are vigilant in insuring their home and contents, but unfortunately many underestimate their true value or neglect to upgrade their policies when they purchase expensive items.
It’s important to make sure you have the correct level of cover when you take out a policy so that you’re fully protected should your home or property be damaged or stolen.
This checklist will help ensure you’re not under-insuring any of your possessions.
1. Is the sum insured in your policies current?
The sum insured is the maximum amount the insurer will pay if you make a claim. The correct level of buildings cover should cover the full rebuild cost of the property and not the property’s market value. Contents insurance should include all the possession inside your home and garden, including outdoor furniture, barbecues and the like. If you do any home improvements or purchase any expensive goods, remember to update your policy.
2. What is the single item limit?
Most insurers will pay up to a maximum of £1,500 for a single item, but this limit does vary dependent on the insurer. Always inform your insurance company of any expensive individual items you wish to include on your policy. It may be necessary to pay a higher premium or take out a separate policy. These options are often worth it to protect your valuable possessions.
3. What are the policy exclusions?
The cheapest insurance quote does not always offer the most comprehensive policy. Always make sure you check the policy terms and conditions and exclusions before you purchase. Failure to have the correct level of cover could result in the insurer refusing to pay out in the event of a claim.
4. Do you have 'new for old' cover?
This is also known as ‘replacement as new’ cover and means the insurer will pay out for the price it would cost to buy the items new. Most insurers won’t provide new for old cover on clothing, household linen, bicycles and audio/visual and computer equipment more than is five years old and has been accidentally damaged. Instead, a deduction is taken from their value for wear, tear and depreciation.
5. Are your security measures approved by your insurer?
Insurers tend to favour mortice deadlocks and rimlocks that conform to British Standard 3621 and a NACOSS approved alarms. Make sure that you always lock doors and windows and set the alarm if you are leaving your property for any period of time.
6. Are you at risk of flooding or subsidence?
If you live in an area prone to flooding and have buildings insurance, it is critical that you inform your insurer. Failure to tell an insurer the truth about your property and the area may result in any claims being rejected.
Living in a flood zone can mean there are limited house insurance options available. The best advice from the industry is remain with your current insurer.
It is rare to encounter a problem (such as flooding) with house insurance as an existing owner. The potential hitch comes when a house is sold and new owners tries to secure insurance. To prevent being caught in this trap, ask the current owner if they had any problems when insuring the property. If they did, find out the name of the insurance company they used to ensure you get the most appropriate cover.
A final word
It pays to shop around when looking for home and contents insurance as different insurers specialise in different risks. One insurer may offer a more suitable product at a more competitive price.
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