It found 41% of those who received a ‘walk through’ appraisal of their homes as part of Wesleyan’s Private Clients Insurance Service had overestimated the value of their possessions, up from 29% in 2014*. On average, they had incorrectly valued their possessions by more than £47,000 in 2015, an 85% increase on the year before.
Meanwhile, the percentage of customers who have underinsured their valuables has fallen to 58% in 2015, from 70% in 2014. The average value they underinsured by has also decreased to almost £40,000, down from £46,700 on the year before.
While overvaluing possessions will mean policyholders are paying more in premiums than they need to, undervaluing could cost them thousands of pounds if they need to make a claim on their home insurance. This is because they will only receive a payout for what they have estimated their possessions are worth – not their actual value.
The most common reasons for incorrect or invalid insurance cover include:
• Forgetting to insure items received through inheritance
• Failing to comply with policy terms and conditions, such as not activating an alarm, having inadequate window locks or failing to use a safe for expensive items
• Not taking into account the cost of replacing electronic gadgets and home office equipment, or making substantial home improvements
• Not being aware of the limits of how much can be claimed on individual items or in particular circumstances, such as the value of individual items of jewellery, the cost of tracing and accessing water leaks, or the expense of relocating to temporary accommodation in the event of a flood or fire at home.
In the five years Wesleyan has been collating this information, 97% of those surveyed were found to have incorrect cover in place.
As well as putting an incorrect value on items, homeowners often leave expensive items, such as jewellery or fine art, under a general home insurance policy when it would be better, and often more cost effective, for them to take out bespoke cover for them individually.
Diane Naughton, Private Clients Manager at Wesleyan, said: “The most common time for policyholders to find they are underinsured is when they make a claim, by which time it’s too late. It is vital to take time to assess the real value of a property and its contents and insure them appropriately.
“For those underinsured, any claim could be subject to an average clause that could significantly reduce any payout they receive. In a worst case scenario, the cover could be withdrawn and declared void.
“People should go from room-to-room and make a note of valuables, including jewellery, artwork and high tech equipment and assess how much they might be worth. This is where is makes sense to work with a specialist insurer and professional home appraiser that can make sure individual items are properly categorised and valued. Often, an off the shelf home insurance policy will not provide enough cover for an expensive item that has not been specifically identified.”
Wesleyan is a mutual financial services specialist for doctors, dentists, lawyers and teachers. Its free ‘walk-through’ appraisal service is offered as part of its Private Clients Insurance service.
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