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Assetsure News 12th October 2007
UK Home Owners
Warned Not be Caught Out By 'Under Insurance'
Homeowners are being advised to
check their
home insurance policies carefully to make sure
that they are not caught out by the consequences of under insurance.
Statistics reveal that one in three British homeowners splash out on major home
improvements as often as every five years but many are neglecting to check their
home insurance polices or inform their insurers of the changes made. In addition
to this much, recent uncertainty in the housing and
mortgage markets is prompting many homeowners to stay put and improve
or extend their existing homes and thus the actual rebuild costs of many
properties is set to rise. As many in one in three people are unaware that
improvements to the home should be notified to the home insurers, who usually
take a dim view of under insurance.
What’s more, the research showed that one in three people are falling victim to
the "latest fashion syndrome" whereby they have work carried out that is
unnecessary, in particular needlessly replacing bathrooms, bedrooms and
flooring in an attempt to keep up with the neighbours and friends. This home
fashion culture seems to be more prevalent amongst younger home owners.
Two things must be borne in mind before works are carried at at your home.
1) Always tell the insurance
company of any work that is being carried out, usually, they wont care about
minor repairs or redecorating, but any major structure work such as a loft
extension or extending the property should be notified and written
confirmation that they are prepared to continue cover obtained. Many
insurance companies will place a contractors exclusion on your policy which in
effect means any damage caused by workmen on your premises is excluded. With
this in mind you should always check to see if your contractor has adequate
public liability insurance. Most modern
Public Liability policies are issued with a indemnity limit of at least
£1,000,000, if you contractor is boba-fida, he wont mind you asking to see
evidence of insurance.
2) All improvements to the
home should be notified to the insurers , especially if it increases your home
sum insured, in some cases such as the installation of double glazing or an
alarm system, you may find yourself entitled to a discount. You can check to
see if you sum insured is adequate by visiting the
Association of British Insurers web site and using their guide to
rebuilding costs. You can locate it by following this link.
Almost all UK home insurance
polices will contain something known as an average clause, although most also
are index linked to help prevent under insurance, this is no guarantee and you
should check your sums insured on a regular basis. The imposition of average is
a method by which insurers deal with under insurance in the event of a partial
loss claim occurring at the insured property. In simple terms, if you insure you
house for £100,000 and the true rebuilding cost is £200,000 then the effect of
the average clause will be to reduce a a claim for £5000 down to £2500.
Similarly speaking, with
Home Contents, most people are adding to their
personal belongings on an regular basis, your home contents policy may be index
linked but this will really only increase your sum insured by approximately 6%
per annum. It is essential that you keep a check on your home contents and
notify your insurance company of increases as soon as possible.
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Copyright Assetsure Limited 2007
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