Most homeowners are underinsured in the UK |
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Published
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Sat, 19 Mar 2005 01:00
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A research initiated by an investment & insurance advisory firm of UK came up with some surprising results: it said 9 out of 10 homeowners, whose homes and belongings were insured, could find a huge shortfall if they were to make an insurance claim.
As part of the study, an independent loss assessor visited 68 homes across the United Kingdom. The assessor reported that the contents in most, as much as 92 percent, of these households, were underinsured by the owners. They were underinsured by as much as a third of their value. There were some individual households that were underinsured by up to 81%.The average shortfall works out to £10,000.
| An example from the report: one homeowner believed the contents of his house to be worth £44,600, whereas the loss assessor made an expert valuation of £64,800. In most cases the valuation was inaccurate.
A spokesman from the firm explained how people underinsure their personal property. When people are asked to mention the value of their home’s contents on an insurance application form, they generally mention the price they paid rather than the replacement cost. In the event of a theft, fire, or some such accident in which the items are lost, estimating the loss becomes very difficult, especially with antiques, jewelry and furniture. Other items such as home appliances like TV sets, computers may cost less to replace. Also, while estimating the cost of their property most people almost certainly forget everyday things like clothes, cutlery, crockery, etc.
A couple of insurance firms have taken a cue from the report and announced policies that have a ‘no sum insured’ feature which ensures that the clients will never be underinsured. The insurance company would make an accurate assessment of their property at the time of the claim.
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