An underinsured property is almost as damaging as having no insurance. You may not find out you are underinsured until you try and make a claim and discover you’re not sufficiently covered and then it’s too late. There are several signs to watch out for that might indicate your property is underinsured:
If you haven’t reviewed your insurance policy in several years and simply keep renewing without reading the policy, there’s a chance it might not reflect the current value of your property. Property values tend to increase, as do construction costs and materials, so an outdated policy might not cover the full cost of rebuilding or repairing your home at current prices.
Insufficient Coverage Limits
Always check your policy’s coverage limits. If they seem low, especially when you look at the current property values in your area, it could indicate that your property is underinsured. Coverage limits should align with the actual replacement cost of your home and belongings.
Limited Risks Coverage and Uninsured Disasters
Some policies cover only specific hazards, such as fire and theft, leaving out crucial events like floods or storms. If your area is prone to certain disasters, such as flooding, it’s essential to ensure your policy covers these risks adequately. Some natural disasters, like floods, require separate insurance policies. If your property is in an area prone to these and you don’t have the necessary additional coverage, your property is underinsured against these specific disasters.
Have you made significant renovations or improvements to your property? Did you tell your current insurer? If not, these changes might not be covered sufficiently in your existing policy. Failure to update your insurance after renovations could leave parts of your property uninsured or underinsured.
Neglected Additional Structures
If your property has additional structures like a garage, shed or garden office, they should be listed and covered in your insurance policy. Not including these means they won’t be protected in case of damage or loss.
Underestimated Personal Belongings
Insurance policies often cover personal belongings inside your home. If you have high-value items like jewellery, art or electronics, these might not be fully covered under a standard insurance policy. Many policies list high-value items individually and offer at home and away from the home. Underestimating the value of your belongings can leave you with insufficient coverage.
Inadequate Liability Coverage
Liability coverage protects you if someone gets injured on your property. If the liability limit of your policy is low, it might not be enough to cover potential legal and medical expenses. Inadequate liability coverage could leave you financially vulnerable if claims are made against you for personal injury or property damage that results from your ownership of your property.
By being aware of these signs, property owners can check whether their current insurance policy provides adequate protection. You now know what to look out for. By regularly evaluating your policy, and always reading the policy documents your insurer sends you, you can be sure that your property is appropriately insured and that you are financially prepared for any unforeseen circumstances.