A recent survey found that two-thirds of wealthy homeowners lack the proper amount of insurance for their houses and properties.
According to the results of the survey, 65% of those who owned a high net worth home policy, who also had a building and contents valuation in 2016 were underinsured. On average, those clients were underinsured by 50% of the original sum insured.
Being underinsured means you do not have adequate cover for all of your possessions, meaning that should the worst happen like a fire or flood, you will only receive a fraction of the amount you need to rebuild.
Why is this happening?
Underinsurance is a common issue with high net worth customers, as they often own a good deal of items that go up in value, the amount needed to safeguard your possessions is constantly fluctuating.
Other causes include inheriting items and incorrectly calculating or attempting to estimate the true combined value of your possessions.
Concerned you might be uninsured? Make sure you check the following:
• When was the last time you had a valuation? If you bought the policy in 2014 and haven’t had a professional valuation since then, there’s a strong risk that you are underinsured.
• When you had your last valuation, were areas like annexes, garages, basements, and sheds included? If not, you should arrange for a new valuation.
• Do you own anything like wine or art that tends to go up and down in value depending on age and trends? These are usually categorised as ‘passion assets’ and will need re-valuing regularly.
• Have you had any lifestyle changes? Maybe a new child or an older one has moved out? That can have an effect on your property value.
• Do you have any valuable individual pieces on your property? If so you should have them valued and then check them against the single-item limit on your policy. If doesn’t provide adequate cover, you might need to increase the limit.