Is your household under-insured?
The alarming result of recent research showed that almost seven million British households are under-insured. Could yours be one of them?
When it comes to insuring your home, it is easy to underestimate just how much the contents are worth. You might think you have few things of any value, but take a moment to consider how much it would cost to replace your TVs, sofas, beds and other furniture, without adding in the costs of new wardrobes for the whole family, gadgets, toys, games consoles and so on. This is before you have even added on valuables such as jewellery.
With one in five families thought to be underinsured, the estimated costs of items that are left uninsured is around £20 billion – read more here.
And the issue is not just that you wouldn’t be able to replace all your items should the worst happen and you have a fire or flood at home; if you are seriously underinsured, your insurance company could even refuse to pay out or only make a partial payment.
So how do these discrepancies occur? The trouble is that it is easy to include the obvious things that we have mentioned, such as TVs and games consoles, but very easy to forget to mention carpets, curtains, flooring and rugs. You may not remember about items that are stored away out of sight in cupboards – such as pans and crockery – or even the contents of your loft (suitcases are pricey to replace even though they live out of sight for most of the year). Not to mention the cost of replacing the clothes and shoes in your wardrobe!
When making your estimates, remember that some high-value items may need to be covered separately, rather than being covered in the general policy, such as jewellery, watches, art and so on. Often policies only cover gadgets to a certain limit – so if you have a high-value computer that you use for gaming or graphics work, you need to check that it is covered under your general contents insurance. If not, you should have it listed separately.
You also need to take into account the fluctuation of values – for instance gold and silver values can rise quickly – and the rate of inflation. You may not buy clothes very often, so you might not realise that replacing them could cost considerably more than you paid out a few years ago.
When it comes to your buildings insurance, the amount covered needs to be how much it would cost to rebuild your home, not how much it is worth in the current market. This is normally significantly less because the land does not need insuring.
Check out the guidelines from the Association of British Insurers for further information.
If you think you need to take another look at how much cover you need, it is worth talking to the experts to get it right. If you would like to discuss your insurance requirements, we would be happy to help. Please contact us without any obligation.
Established in Berkshire in 2004, J Finance Ltd is one of the leading financial planning companies in the area. We serve clients across the South of England including Oxfordshire, Buckinghamshire and Hampshire. If you would like to discuss this subject or any other financial matter, please contact us on 01635 521 300 or email email@example.com.