Underinsurance - are we doing enough?

Underinsurance has always been an issue for insurers, we've looked at why.

Underinsurance has always been as issue for Insurers. Even the best attempts to ensure it does not happen do not always work. Sadly, this can be the case for all of us, even HNW customers who often have access to good advice can get it wrong. 

This can be for a number of factors for example, sometimes the right questions have not been asked, or perhaps a number of large purchases or a renovation has impacted the values; for others it may be that there is no clear understanding of the risk and the customer's lifestyle. 

Most recently we have seen some scenarios that demonstrate this: 

  • A Grade II listed, ten bedroom Victorian house damaged by a storm that was initially insured for £600,000, however when the loss adjusters went to visit the property, they found that the quality of materials used meant that the property was significantly underinsured. 
  • In another scenario, a customer reported water damage to a Steinway grand piano valued for replacement at £80,000. However, the home contents of the 8 bedroom house were only insured for £70,000 and no provision has been provision had been made for the piano - the customer had not accounted for all their belongings when arranging their insurance.
  • We also had a claim for the theft of family jewellery from a safe that was insured for £55,000 when we found the replacement value was at least £135,000, this was a classic case of family heirloom which had not been recently valued, despite the valuation services available as part of our policies. 

And so the examples go on. Whilst these may seem like unusual cases, we do often see cases of underinsurance of varying levels. Our claims team are then faced with the challenge of empathetically delivering disappointing news to customers, who discover that their insurance will not respond in full.

To help prevent underinsurance, we have built many tools into our policies which we urge customers and brokers to utilise, from buildings surveys to jewellery or antiques valuations. We know that some customers may be put off by these due to the cost or that they might incur additional premium, however in the grand scheme of things, it can save a lot of stress and upset in the event of a claim knowing that your claim can be progressed quickly and fully.  

a blue umbrella in a sea of black umbrellas

 

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