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Underinsurance means that the level of insurance you have isn’t enough. This can be for your home or the things in it.
If you do not have the right level of contents or buildings insurance, you might have to pay more yourself when you claim.
Your level of home insurance cover will state how much you can claim for certain items. If the item is worth more than the limit on your policy, you might have to pay the rest yourself.
Your mortgage lender will require you to have buildings insurance that covers the cost of rebuilding your home from scratch. If you rent, you won’t need to worry about underinsuring your home. This is because your landlord will handle the buildings insurance.
You will also need to keep your policy updated to ensure it covers new items you buy. If you buy a new TV, but don’t update your policy, you may not be able to claim for the full amount if it’s stolen.
You will also need to keep your buildings insurance up to date. If you make big changes, like adding a loft conversion, you’ll need to let your insurer know.
In both cases, you will have to pay more money than if you were properly insured. If you aren’t insured, you’ll have to buy a new item if it’s stolen. If you are underinsured, you’ll have to pay more towards your claim to replace it.
To make sure you are fully covered in the event of fire, flood or theft, you need to have enough insurance to cover all your costs.
Giving an accurate value for your home and contents is key to avoid being underinsured.
Here are some of the best ways to ensure you calculate the value of your buildings accurately.
To make sure your insurance covers the entire cost of rebuilding your home, you need to calculate its full value. This isn't the market value of your home, which factors in the popularity of your local area. Instead, it includes the cost of all the materials and labour needed to build your home from scratch.
There are several ways you can calculate the value of your home.
Many online calculators will help you work out the cost to rebuild your home.
To start with, you will need to work out the size of your home in square metres. Measure the length and width of the ground floor, then multiply both figures together to do this.
You can then double the value for your ground floor for your first floor if it is an identical size and shape. If your upper floors are different, you will need to measure them separately.
If you live in an historic or listed building, it might be best to hire a Chartered Surveyor. They will assess your home by taking measurements.
Then they use this to create a Rebuilding Cost Assessment. You can use this to understand how much you’ll need to insure your home for.
Some insurers calculate the rebuild cost for you based on the number of bedrooms you have. This means that you don't have to work out the rebuild cost of your home.
If you live in a leasehold flat or maisonette, it is likely that the freeholder will already have buildings insurance.