Insurers are ‘marketing’ home insurance to try and worry homeowners in to upping their home cover by telling them that they underinsure in their most cherished and expensive possessions.
One of the latest strategies is pointing out that the cost of gold and other precious metals is raising at such a rate that valuations on jewellery may well be for far too little.
However, the strategy exposes the scam of an ‘average’ or ‘under-insurance’ clause in home cover policies.
Basically, this legal loophole lets an insurance company pay out less on a claim based on the amount you are under insured.
For instance, if you have contents worth £100,000 damaged or stolen, but they were insured for £75,000, then the insurer will only pay out 75% of the value of each item rather than the full amount.
Insurers claim this clause protects them for sneaky homeowners who under insure their belongings in the expectation their policy will pay out the full amount in the event of a claim.
Unfortunately, most people who under insure and fall victim to this ploy do not have full cover because they genuinely under-estimated the value of the items they insure or just blindly renew their home insurance each year without considering the consequences.
The best way of making sure your home insurance adequately covers the value of your belongings is to carry out a room-by-room inventory.
Think CSI – crime scene investigation – and photograph everything from several angles by a ruler to help with size. Also take a close up of any hallmarks or maker marks etc. These will help you prove you own the item and its true value if you have to make a home insurance claim.
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