A recent survey of insurance brokers highlighted a widespread ‘guessing culture’ among insurance policyholders when setting their buildings sum insured. A renowned reinstatement valuation expert, RebuildCostASSESSMENT.com, carried out a poll to identify the source of building sums insured for 580 insurance brokers in the UK, leading them to conclude that more than a third of policyholders use ‘market value’, whilst one in five ‘simply guess’.
The majority of insurance policy holders polled (35%) incorrectly set the buildings sum insured in direct correlation to the market value of the property. Instead of focusing on what the building could sell for, policyholders should instead focus on the total cost to rebuild from the ground up, which would more often than not be considerably more expensive than the value available should the house ever be sold. This simple oversight means that over 80% of those surveyed are underinsured.
More concerning still is the 20% of insurance policy holders who admitted to simply guessing at the value of the property when setting up their policy. Considering that 10% of those surveyed simply opted for the same insurance value as the previous property owner, it is unsurprising that 90% of buildings across the UK are not insured for the correct amount, leaving homeowners extremely vulnerable.
Some 24% of insurance policyholders surveyed claimed to have set their building sum insured at the value suggested by their bank or building society. A further 6% set the value based upon the suggestion of accountants, property agents and other third-party advisers. Whilst these professional services providers may be able to suggest some level of direction, it is always advisable to commission a professional ‘Regulated by RICS’ property assessment. However, currently only 5% of insurance policy holders are utilising this expertise. Often this is due to the cost of the valuation, yet a number of risk management service providers offer a cheaper digital approach. In fact, many insurance providers (including Robison) now offer the assessment service as part of their insurance package.
For high net worth properties, underinsurance is a particularly significant issue, so we would highly recommend contacting your broker to obtain a ‘Regulated by RICS’ property assessment. In this way, you can have the peace of mind that, should the worst happen, your property and assets are properly protected.
Robison is an experienced insurance broker based in Petersfield, providing risk management advice and services to businesses and individuals within Hampshire and the surrounding areas. From health and classic cars, to sculpture and fine art, our team can offer tailored advice and services no matter your requirements.
To arrange a Regulated by RICS property assessment, or to simply speak to a member of the team, please contact Robison on 01730 265 500 or email hello@robison.co.uk
