When it comes to your Home & Contents insurance, do you know what the term “average” means?
In insurance, "average" refers to a clause that could affect your cover.
It kicks in if you've underestimated the value of your home or possessions and here's how it works:
Let's say your home is insured for £500,000 but the cost to rebuild it would actually be closer to £600,000 - in this case, you are underinsured.
In case of a claim, such as a fire damaging only part of your property, your insurer may apply the "average" rule which means they will only pay for a proportionate amount of the damage.
So if you underestimated the value of your home by 50%, your insurer would only cover 50% of the damage, even if it's below your policy limit.
To avoid this, it's crucial to make sure your home and possessions are insured for the right amount.
Regularly review your policy and update it if needed, especially after making any significant purchases or renovations.
This is particularly important now when the cost of materials and trades needed to rebuild your home have increased significantly as a result of inflation and rising costs in general.
The UK Building Cost Information Service (BCIS) estimated that the cost of rebuilding a home has risen by 19% from 2022 to 2023* - exceeding the rise in inflation!
To discuss a review of your Home & Contents Insurance, you can contact our team or phone us on 654000 or email insurance@edgewater.co.im