Underinsurance is a growing issue, and people often underestimate the value of their property, leaving them caught out at the crucial moment. Finding out you’ve only insured your property for half of what it’s actually worth is going to make a difficult time even more problematic. There are a few key things to think about when arranging insurance for your property.
All about the base
To start with, what is the valuation of your property based on? If it’s based on your mortgage valuation, remember that the mortgage valuation is nothing to do with the insurance value. People often think that the market value is related to the insurance value, but in reality these two are completely different. The market values can change dramatically in a short space of time but the insurance value won’t necessarily alter in line with the market. If you can’t source an original valuation for the property then it’s worth getting your own done; people often simply rely on guesswork or previous owners’ valuations, which can be wrong and leave them out of pocket in difficult times.
Location, location, location…
It’s also important to think about the location of your property. Is the property easily accessible? If any building work needs to be done, are there any restrictions on tradesmen or building materials getting to the property? If the property is in a conservation area there are often additional factors that need to be considered when bringing in materials, which could mean additional costs if the property’s insurance doesn’t cover it.
Living in a material world
And while we’re on the subject of materials – what materials would you need? If the property is made from stone, then repairs and maintenance costs are generally higher than for brick properties. This is particularly relevant if the stone is unique and locally sourced. If the property is built using alternative methods, such as cob, straw or thatch, then any re-building work is likely to be more difficult to arrange. Older properties tend to be built from better quality materials, so if your property is reaching its centenary then a proper valuation is a good idea. If the property is listed the property is likely to be or special architectural or historic interest, and so materials are even more of a primary concern. A number of authorities will need to be involved should any repair work need to be done, and this can all add to the cost and the timing taken.
The Extra Factor
The most obvious one of them all is, have you actually factored everything in? People often have a valuation for the property but leave out the garage, the patio and the tennis court, all of which come under the definition of buildings. Any alterations should also be subject to a valuation as extensions and refurbishments often increase the value of the property. And what about your extras? Solar panels on the roof, a cinema room, a gym (even if it never gets used!) – does your insurance cover the costs of their replacements in the event of any damage?
Remember, it pays to use a broker who understands your requirements and is able to offer the most suitable insurance solution to meet your needs. When it comes to a claim, knowing you’re correctly insured will make everything run smoother.