The dangers of under-insuring
When insuring anything, be it your home, car or bike, it’s easy to underestimate their true value, or in other words how much it would cost to replace them like-for-like. It can also perhaps be tempting to downplay how much something is worth in order to get a cheaper quote. Whatever the reason for undervaluing, the bottom line is that you will end up underinsured, meaning that in the event of a claim you may find that either the payout you receive doesn’t cover the replacement cost or the insurer chooses to not pay out at all.
In short, saving a few pounds on a premium now could ultimately end up costing you far more in the long run.
The importance of not under-insuring
A common misconception is that the quoted level of cover given by an insurer will cover possessions up to that value, regardless of the total value of the possessions, which is simply not the case.
For example, if a policy provides home contents cover of up to £75,000 but the total value of your contents is more like £100,000 this doesn’t mean that, in the event of claims up to £75,000 you’ll receive the full amount. The insurer could either not pay out at all, to penalise you for underinsuring, or apply an “average clause” based on how under-insured you are. So if the claim is for, say, £40,000 the insurer would only pay out £30,000 based on the quoted value of your contents being 75% of the true value. It therefore makes sense to have insurance cover for the actual value of your possessions – if you have £100,000 worth of content, make sure your policy covers it.
House insurance with bikes
If you’re anything like us, you’ll love your bikes and may well have more than one in your collection. Whether it’s your “best” summer bike, a winter commuter, a TT bike, mountain bike or any other type of two wheeled steed, if you’re looking to get it insured the chances are it’s cost you a pretty penny. Therefore the last thing you want to do is under insure it so that, in the event of a claim, you’re not able to replace it like-for-like. It’s vital to give an accurate value of your bike, or bikes, when it comes to arranging insurance. This is particular true if you have several of bikes in a household, when it can be easy to underestimate the value of some of the “lower” bikes in the collection. Ensuring you have an accurate total value of all the bikes will help avoid any nasty surprises if you ever have to make a claim.
Calculating home contents value
To avoid the risk of being underinsured it’s worth spending a bit of time tallying up the exact value of all your worldly goods, not least your bikes, to make sure you get an appropriate level of insurance cover. To help you with this, we’ve devised a simple-to-use home contents calculator which should help give you an accurate idea of the total value of your possessions.
If you would like to discuss your insurance needs or get a better understanding of how to calculate the value of your possessions, including your bikes, drop us a line and we’ll be happy to help.