We all felt costs of household bills and essential products creeping up in 2022 due to the cost-of-living crisis; however many households will have welcomed a reduction in average home insurance premiums between April and October.
However, due to rising inflation, supply chain concerns and climate issues, EY forecasts that UK home and motor insurers are set to make the largest annual loss in over a decade in 2023, resulting in increased premiums for consumers.
In an ever-changing market, there are still many things consumers can do to save money. But the most important requirement remains; finding adequate insurance for their specific needs.
Let’s explore the importance of seeking professional advice before purchasing your insurance.
The gap of underinsurance is widening.
A 2022 report from RebuildCostASSESSMENT.com found that 83% of properties in the UK were found to be underinsured. This deficiency has been put down to a huge rise in building materials and associated costs, such as professional fees and labour.
It has also been reported that a typical UK home contains upwards of £35,000 worth of contents.
The danger of being underinsured.
If you are underinsured and need to make a claim, your insurer may only pay a proportion of it. And the amount they agree to pay may not even be as high as your policy limits.
For example, if you have £250,000 buildings cover, and your claim is for £300,000, you have a deficit of £50,000 (17%). When agreeing to settle your claim your insurer may only pay 83% of the amount you are covered for (£250,000) leaving a £92,500 gap.
When discussing insurance with a professional they will guide you through a full fact find. This involves gathering information on your home and its belongings to recommend a policy with adequate cover limits for your particular circumstances. Using information collected from your mortgage lender and a rebuilding calculator, such as RICS, they can guide you in the right direction and in most circumstances will provide a bedroom rated policy (when you work out the amount of contents cover required based on the number of bedrooms) which offers blanket levels of cover.
Reducing the risk of non-disclosure.
Non-disclosure/misrepresentation is when a consumer leaves out relevant information at the time of completing an insurance application. This may be accidental or on purpose, but the consequences will be the same.
It is important to understand that an insurer may reject a claim if they believe the consumer has not disclosed something they may have affected the insurer’s ability to incept the policy in the first place such as previous claims or details of the property.
Speaking to an insurance professional and taking their advice during an insurance application is the most effective way to reduce problems during a claim attributed to the non-disclosure.
An adviser will ask a number of questions about you, your home and its belongings as well as provide you with information on cover features and eligibility before recommending a product to suit your requirements.
If your adviser identifies that, due to your circumstances, you may not fit an insurer’s eligibility criteria (for example, you have a lodger living with you) they can recommend alternative options such as non-standard products that will provide adequate cover.
Cover limits, endorsements and excesses
During your conversation with an insurance adviser, specific advice will be given on cover limits for things such as individual items. Most insurers will require you to specify individual items that exceed a certain value. If high-value items are not specified, then a claim may be rejected.
Additional levels of cover such as accidental damage, personal possessions, home emergency and legal cover will be discussed in detail giving you the option to include those which are most important to you.
Within the terms and conditions of your insurance policy, there may be certain endorsements for you to be aware of such as un-occupancy clauses, renovation works or the requirement to have a safe installed if you own particularly high-value items of jewellery.
An adviser will take the time to explain these endorsements before cover is submitted to ensure there are no surprises if you need to make a claim. If you don’t seek the insight of an insurance specialist beforehand, you may miss these yourself in the T&Cs.
And finally, policy excesses. An excess is the amount of money you are responsible for at the time of claim. The can typically vary between £0 – £1,000 and a consumer will be able to select the excess that is most comfortable for them.
There is usually one excess for most claims, however claims for things like escape of water and subsidence can carry additional excesses that you will want to be aware of before a claim occurs. It is the responsibility of an adviser to discuss these excesses with you and to make sure that should a claim arise the excesses you have chosen are affordable.
At Nest GI, our quotes are provided through insurers that have been expertly assessed and awarded a 5 star rating by Defaqto. Defaqto star ratings show the quality and comprehensiveness of the features and benefits a financial product offers.
Get in touch today to request a quote and receive full advice from our trained advisers to find a policy tailored to you and your property.
