Under Insurance and High Value Homes
Under insurance is a rising concern in the UK as more and more people are failing to insure their homes and contents for their true value. Worse yet the implications of this don’t really become apparent until it’s too late. This article examines why so many high value homes are under insured and takes a look at High Value Home Insurance and the implications of underinsurance.
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Having recovered from the severe hit suffered in the financial crisis of 2008, UK property prices have been steadily increasing ever since. According to an article in The Guardian in 2018, the UK was home to over 750,000 property millionaires – someone whose property exceeds £1m. However, with the housing market being something of a moveable feast, if you have been in the same property for many years or have remodelled, redecorated or perhaps received an inheritance, your home and its contents could be considerably underinsured.
Condition of Average is a standard clause within many insurance policies which means that if your property is underinsured, in the event of claim, any pay-out will reflect the percentage of insurance. For example; if you have underestimated the value of your home and contents by 50% you will only receive 50% of the amount claimed. This is irrespective of the value claimed. For example; if your home and contents were worth £1m, but you were only insured for £800k, even if you were only claiming for £100k which is well within the £800k cover you’ve agreed, the pay-out could still be restricted to £80k.
High value homes in particular tend to fall foul of being underinsured. This could be for a variety of reasons, for example your house price could have risen without you necessarily being aware. House prices are impacted by a wide variety of factors, for example a local school performs exceptionally well, there are building works, investment in the local area or new job opportunities created, all of these things could raise buyer demand and increase your property value. Influencing factors on property prices include:
Interestingly the Telegraph has reported on the impact of history and provenance on property prices, with homeowners adding value to their homes by hiring historians to investigate and discover interesting facts about their properties and in doing so increasing their value.
“Estate agents are including the details of a property’s past to add interest to historic buildings amid a surge in public curiosity about the provenance of their homes.” – Yohannas Lowe writing for The Telegraph, March 2019
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Another reason many high value homes fail to have the correct level of cover in place concerns the risk involved with unoccupied property. Risk rises significantly if a home is left vacant for whatever reason for 30 days or more. Damage due to vandalism and burst pipes is potentially much greater and so if a home is left empty for more than 30 days, it is important to take out unoccupied home insurance. Extended periods of vacancy are more likely when more than one property is owned. Many people fail to realise that unoccupied property insurance isn’t just for when a property is under renovation, probate or awaiting sale, it also applies if home owners are taken ill, enjoying extensive travel or are away at another premises, for example a holiday home.
A common reason for underinsurance lies in the estimation of contents. Many people assume that an insurance claim would result from a burglary and so fail to take fittings, carpets and furnishings into consideration. This can be a particularly costly mistake in the event of fire or flood where everything could be destroyed, but not everything is covered.
It’s important to look closely at the level of contents insurance you have in place, especially if valuable antiques or works of art are kept at the property, this includes collections such as fine wine, watches or jewellery. Many policies set a single item limit to valuable items that may not cover your more precious items. It can also be useful to have a policy that doesn’t require you to list valuable items under a certain amount, that way you’re covered regardless of whether you purchase or inherit expensive items.
Get a Quote
Agreeing the correct level of cover for your home, even if it has been underinsured for years, may not make the difference to your premium that many people expect, especially if you take out a combined policy such as high value home and contents insurance.
As the name suggest Highworth Insurance specialise in insuring high value homes. Our knowledgeable Account Managers can discuss your requirements and tailor a policy unique to you and your property, making sure you are paying for the precise cover you need, no more and no less. Our Account Managers are available Monday to Friday between 9am and 6:30pm and on Saturdays between 9am and 12:30pm. They will be able to give you a competitive quotation on: 01202 937430.
Get a Quote
Having recovered from the severe hit suffered in the financial crisis of 2008, UK property prices have been steadily increasing ever since. According to an article in The Guardian in 2018, the UK was home to over 750,000 property millionaires – someone whose property exceeds £1m. However, with the housing market being something of a moveable feast, if you have been in the same property for many years or have remodelled, redecorated or perhaps received an inheritance, your home and its contents could be considerably underinsured.
The dangers of underinsurance
Condition of Average is a standard clause within many insurance policies which means that if your property is underinsured, in the event of claim, any pay-out will reflect the percentage of insurance. For example; if you have underestimated the value of your home and contents by 50% you will only receive 50% of the amount claimed. This is irrespective of the value claimed. For example; if your home and contents were worth £1m, but you were only insured for £800k, even if you were only claiming for £100k which is well within the £800k cover you’ve agreed, the pay-out could still be restricted to £80k.
High value homes and underinsurance
High value homes in particular tend to fall foul of being underinsured. This could be for a variety of reasons, for example your house price could have risen without you necessarily being aware. House prices are impacted by a wide variety of factors, for example a local school performs exceptionally well, there are building works, investment in the local area or new job opportunities created, all of these things could raise buyer demand and increase your property value. Influencing factors on property prices include:
- Location
- Condition
- Features - original and/or additional
- Amenities – schools, employment, services
- Listed property
- History – see below
Interestingly the Telegraph has reported on the impact of history and provenance on property prices, with homeowners adding value to their homes by hiring historians to investigate and discover interesting facts about their properties and in doing so increasing their value.
“Estate agents are including the details of a property’s past to add interest to historic buildings amid a surge in public curiosity about the provenance of their homes.” – Yohannas Lowe writing for The Telegraph, March 2019
Get a Quote
Unoccupied property and underinsurance
Another reason many high value homes fail to have the correct level of cover in place concerns the risk involved with unoccupied property. Risk rises significantly if a home is left vacant for whatever reason for 30 days or more. Damage due to vandalism and burst pipes is potentially much greater and so if a home is left empty for more than 30 days, it is important to take out unoccupied home insurance. Extended periods of vacancy are more likely when more than one property is owned. Many people fail to realise that unoccupied property insurance isn’t just for when a property is under renovation, probate or awaiting sale, it also applies if home owners are taken ill, enjoying extensive travel or are away at another premises, for example a holiday home.
Undervalued contents insurance
A common reason for underinsurance lies in the estimation of contents. Many people assume that an insurance claim would result from a burglary and so fail to take fittings, carpets and furnishings into consideration. This can be a particularly costly mistake in the event of fire or flood where everything could be destroyed, but not everything is covered.
Valuables, collectables and beautiful things
It’s important to look closely at the level of contents insurance you have in place, especially if valuable antiques or works of art are kept at the property, this includes collections such as fine wine, watches or jewellery. Many policies set a single item limit to valuable items that may not cover your more precious items. It can also be useful to have a policy that doesn’t require you to list valuable items under a certain amount, that way you’re covered regardless of whether you purchase or inherit expensive items.
Get a Quote
Top tips to avoid being under insured
Agreeing the correct level of cover for your home, even if it has been underinsured for years, may not make the difference to your premium that many people expect, especially if you take out a combined policy such as high value home and contents insurance.
- Undertake regular valuations of your home and contents - especially if it’s been upgraded or expanded. There is valuation software and various apps available to help with this.
- Consider a detailed specialist valuation from an accredited surveyor or architect – this is especially worthwhile when determining rebuild costs for insurance purposes and if your property is high value, in a sought after location, listed, thatched or contains original features.
- Carefully evaluate your home contents, being sure to take furnishings, carpets, fittings, fixtures, appliances and furniture into account. Online software and apps are available to assist with this as well.
- Take out specialist cover for expensive items such as works of art, antiques, musical instruments, fine wines and jewellery. Keep records of specialist valuations of these and update them every 3 to 5 years.
- Remember to take out unoccupied property insurance of your property will be empty for 30 days or more.
- Consider specialist High Value Home Insurance.
Specialist High Value Home Insurance
As the name suggest Highworth Insurance specialise in insuring high value homes. Our knowledgeable Account Managers can discuss your requirements and tailor a policy unique to you and your property, making sure you are paying for the precise cover you need, no more and no less. Our Account Managers are available Monday to Friday between 9am and 6:30pm and on Saturdays between 9am and 12:30pm. They will be able to give you a competitive quotation on: 01202 937430.
To discuss your insurance needs with an experienced account manager please call 01202 937430 or apply online to get an instant quote