How To Check If Your Home Is Underinsured
By Simon Christopher
If you have not updated your home insurance in a while, then you may be underinsured, a problem that could cost you thousands should something happen. It is important to update your buildings and/or contents policy frequently - preferably at least once a year - and also to do so every time you make a big purchase or increase the value of your home in any way (like installing new windows or adding a conservatory).
If it's been a while since you have updated your policy, then it is time to make a check of your house to see if you are currently underinsured. The first step is to check the house itself. The proper home insurance cover should pay the cost of rebuilding the house should anything happen to the property. Note that this is different from the market value of the home, which is likely to be much higher. Do not forget to include any outbuildings on your property. You should update the rebuilding costs for your insurance cover every time you make home repairs or carry out improvements, and every few years you should re-evaluate the costs to see if inflation or housing market prices have increased the rebuilding cost of your property.
Next, you should walk through your home with a note book, pen and calculator, and take a good, long look at your possessions inside and out. Your contents cover should be enough to replace your current belongings inside the property. There are two ways in which insurers will do this, so make sure that you are aware of each and take out the correct policy for your needs. Some policies will cover a replacement cost, meaning that if your television is destroyed in a home fire, you will get an equal or better television through your insurance. The other type of contents cover is cheaper, but could cost you more in case of an emergency, and only covers the value of the item at the time that it was destroyed. This means that your insurance company will pay you the current value of your old, slightly outdated television set, which may be worth next to nothing anymore.
Insure the contents of your home carefully, and make sure to note and mention the costs of any valuable individual items that you wish to insure. These items can include your stereo system, camera, computer, collectible items, and nice pieces of furniture. Mention these items to your insurance company or broker to ensure they are adequately covered at the correct rates and remember to update your policy regularly. Also, do not forget to take a trip outside to catalog your barbeque, outdoor furniture, and other outside property or belongings which can be damaged or stolen and would be costly to replace.
You should read the policy conditions carefully before buying any home insurance. Check for any exclusions or excesses that could make claiming for certain items or under some circumstances expensive. It's also worthwhile contacting the insurer to check if they offer any discounts for installing and using approved security measures and get the details of recommended dealers and fitters. Don't forget to update your policy if you upgrade your security.
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