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What is Underinsurance

What are the risks of underinsuring your home?

Before we explain the risks of underinsurance, it’s important to understand what underinsurance is.

What is underinsurance?

Put simply; underinsurance is when you insure something for less than its actual value.

Underinsurance tends to be more of an issue for people insuring homes, as it can be tricky for most people to estimate the cost of contents cover and the cost of rebuilding the house.

If you haven’t insured your home for its accurate value, you may not have enough cover in place if you need to make a claim.

Why does it matter?

If you are underinsured and needed to make a claim, your insurer may choose to;

– Not pay your claim

– Pay you a reduced amount for your claim

– Charge you an additional premium

How can you avoid being underinsured?

When you get quotes for home insurance, you will be asked to estimate the costs of replacing the home’s contents and how much you think your home costs to rebuild it.

Insurers also recommend that you don’t just use your home’s market value when estimating the amount, as this often is of a higher value than the actual rebuild cost. An overinflated rebuild cost could mean you overpay on your annual insurance premiums.

It is equally essential not to underestimate how much it would cost to replace your possessions.

Personal possessions or contents are generally described as ‘everything that would fall out of your home if you were to pick up, turn it upside down and shake it. Whereas the buildings element usually refers to everything that is fixed.

Where can I find details of the rebuild cost of my home?

  • If the property is a recent purchase or is being re-mortgaged, you can find details of the rebuild costs on the mortgage survey
  • You can request a surveyor to provide you with a survey and estimate of rebuild costs
  • Contact BICS here https://calculator.bcis.co.uk/calculator/calculator.aspx in association with the Royal Institution of Chartered Surveyors.

For most people, their homes and property are their largest assets, so it is essential to make sure they are adequately insured.

How Can Riviera Insurance Help?

Our expertly trained home insurance team can provide quotes on a range of insurance policies from our panel of providers.

Call us today on 01803 659111 or fill in our handy contact form here.