Current levels of inflation are at a 40-year high, which has driven an increase in the cost of skilled labour, goods, and materials, so it is important that your Sums Insured remain adequate in the event of a loss to avoid underinsurance. As a homeowner, it is more important than ever to assess the value of your building and its contents every year.
For example, if your contents are worth £40,000 but you only value them at £20,000 on your policy, you are 50% underinsured. In the event that you need to make a claim, some insurers would only pay 50% of your claim, meaning you would have to pay the rest yourself.
Even if the amount you claim is less than the total sum insured, you won't have paid the right premium for the cover you need. So your claims payment may still be reduced.
Having the right level of cover is almost as important as the cover itself. It means if you ever need to make a claim, you won't find yourself at a loss.
How can you avoid being underinsured?
Many insurers provide blanket cover up to a certain amount, but to ensure the policy continues to meet your requirements, it is vital to conduct a regular review. We can assist you with this to make sure that your property and contents values do not exceed the policy limits outlined in your schedule.
The potential to exceed policy limits may be particularly relevant if you:
- live in larger properties with 5 or more bedrooms
- have large families living at home
- had building works done during the pandemic
Our brokers can also review cover for valuable items, personal possessions, and bicycles as these may need to be specified under the policy and are also subject to policy limits.
If you are concerned that your blanket limit doesn’t provide enough cover, we recommend the following:
Use an online calculator to check the rebuild cost of your property. The Building Cost Information Service(BCIS) is a useful free tool from the Royal Institution of Chartered Surveyors that can help customers calculate the rebuild cost on many standard build homes*.
Make a list of belongings and note the cost of replacing them at today’s values. Review a room at a time, estimating the replacement cost of everything in that room, not forgetting items in drawers and cupboards. Carpets, curtains and blinds are usually classed as contents, and don’t forget to include hallways, corridors, lofts, cellars, and outbuildings.
Make a list of all high-value items, (gold, silver and any other precious metal, jewellery, watches, pictures or works of art and collections of stamps and coins) to ensure that they don’t exceed the policy limit and that the policy continues to meet your needs.
Commonly valuables over £2,000 must be specifiedand the values of these types of items can fluctuate enormously over time. We recommend that specified items are revalued periodically by an independent expert. Please contact your normal Account Handler who can confirm the single item limit on your policy as these vary between insurers.
Speak to an expert
For expert advice on ensuring your home and contents are adequately covered, please speak to your usual Account Handler within PIB Insurance Brokers.
* The calculator is not appropriate for properties of non-standard construction, listed buildings or bespoke/unusual properties.