How could owning an underinsured thatched or listed property affect you if you need to make a claim?

Did you know that 75% of properties in the UK are underinsured?¹ If your home falls into this category, it could impact you should you need to make a claim.

According to professional buildings insurance valuers, Barrett Corps Harrington (BCH), who conducted a survey of over 4,800 properties, an average increase in insurance of 53% was suggested so as to ensure those properties had sufficient cover. ²

Why is the suggested increase so high?

Supply chain issues, labour shortages and soaring energy costs linked to Brexit, the pandemic and the invasion of Ukraine have resulted in inflated prices of materials, energy, and fuel. This in turn has impacted on rebuild and reinstatement costs, resulting in potentially higher insurance premiums.

Why is the rebuild cost more expensive for thatched and listed properties?

Specialist tradespeople and materials can be costly. Restoration of older buildings often requires certain skills, making tradespeople increasingly sought after and expensive. Materials such as reed used in thatched roofs, and certain types of stone found in the construction of listed buildings can be harder to source. Repairing or replacing centuries-old features can also need the workmanship and materials that only a handful of tradespeople can provide.

Why are so many properties underinsured?

As rebuild costs increase, many policy holders are unwittingly underinsured as they have not factored in the increase in rebuild costs.

Homeowners can sometimes be intentionally underinsured by not declaring the correct rebuild figure of their home (‘sums insured’). This can be because:

• The policy holder doesn’t understand the importance of being properly insured.
• They are trying to save money on their premiums by under-declaring the value of their assets.
• The policy holder does not fully understand the Average Clause (also known as the Condition of Average) and how this can have a financial impact.

What would owning an underinsured property mean for you?

Underinsurance is when the sum insured for your property and its contents is less than their rebuild or replacement value. If your cover is insufficient, you might not receive the full pay out in the event of a claim and the shortfall could be significant as the insurer may apply the “Average Clause”.

What is the “Average Clause”?

The Average Clause means you will be responsible for paying part of a claim. In basic terms, if you’re underinsured by 30%, your pay out in the event of a claim will be reduced by 30%.

Obtaining the correct “sums insured”

Avoid insuring your property for the market value instead of the rebuild value, or hazarding a guess at the rebuild cost which can lead to your property being underinsured. You can get a professional desktop or on-site property valuation through a specialist company such as Rebuild Cost Assessment who can help you obtain an accurate rebuild cost for your property.

It’s crucial when you take out new insurance or review your existing policy that you provide your insurer or insurance broker with the correct information. They will then be able to accurately calculate the value of your insurance to ensure you are properly covered.

Getting accurate contents cover

Regularly checking today’s replacement cost of your contents is advisable. Our interactive Contents Calculator will provide you with a total sum figure. If you’re currently underinsured we can help you adjust your cover.

If you would like to discuss your thatched or listed property cover with us, please contact our team.

Alternatively, email us at:

heritageclientsupport@lloydwhyte.com

What matters to you, matters to us

1-2. https://www.aviva.co.uk/risksolutions/news-and-insights/2021/03/underinsurance—the-rising-threat/

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