Inflation is expected to reach eye-watering rates throughout 2023. Prices have increased on everything from white goods and other household items, including building materials, up to food and drinks. It is very easy to become underinsured.
This blog will explain everything you need know about underinsurance, and offer guidance on how to ensure that your home and its contents is adequately insured.
What is Underinsurance?
As a homeowner you should have an idea of the approximate value your home and contents. You should also have a rough idea of what it would cost you to rebuild your home – rather than its current market value – in the event that disaster strikes and it is damaged beyond repair. In periods of high prices, it is easy to make an estimate that is too low.
For example, if your contents are now worth £60,000 but you only value them at £30,000 on your policy, you are 50% underinsured. If you have to make a claims, some insurance companies will only pay out 50%, leaving you with the rest.
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 claim Payment can be made in…