4 tips to avoid underinsuring your home, contents and valuables

When people take out insurance, they expect it to cover the cost of reinstating or replacing their valuables in case of a problem. Underinsurance is, however, a common problem.

Sadly, it leaves individuals and their families with the financial challenge of making up the 'shortfall' when their insurance doesn't fully deliver the funds at a time it's most needed.

Our team of specialists has shared four helpful tips to help you avoid underinsurance in your current policies and ensure you are adequately covered in case of a loss or claim.

 

1.  Regularly review and update your insurance coverage

It makes sense to review what your insurance policy covers regularly. This is because your needs, assets, and your property's value can change over time. Set aside time to conduct an annual review of your insurance policies. This will help you ensure your cover aligns with the current value of your assets and liabilities.

If your circumstances change – for example, you acquire additional assets or your property's value increases, it's worth checking your policy more frequently.

 

2. Accurately assess the value of your assets

Many underinsurance cases stem from inaccurate valuations. This can lead to policies failing to cover high-value items such as jewellery, art, and property. To combat this, seek out and use professional valuations from specialists for high-value items such as jewellery, art, and property.

Don’t forget to update your insurance with these valuations regularly to reflect current market values - your insurance broker can help with this.

 

3. Understand policy limits and exclusions

Another pitfall people often encounter is not fully understanding the limits and exclusions in their insurance policy. Such limits might cap the payout amount, and exclusions can leave them unprotected in specific scenarios.

To avoid this, invest time in reading the fine print of your policy or consulting with your insurer or broker to fully understand what is and isn't covered. If in doubt, always ask.

 

4. Avoid setting cover based on cost savings alone

Another factor behind many underinsurance problems is that the individual initially opted for a lower premium to save money. This can prove a false economy in the long term, as the policy's insufficient coverage can result in the need for their further financial investment to rectify the shortfall.

When selecting insurance, it's sensible to balance affordability with adequate coverage for your needs and circumstances. Prioritise policies that fully protect your financial interests and avoid selecting the cheapest option.

 

Can we help?

Fidentia's private client specialists have a great track record in helping individuals and their families balance insurance costs and coverage to ensure complete protection. If you feel your current policies may be underinsuring you, contact us for an initial chat on tel:+44 20 3150 0080