The dangers of under-insuring
When insuring anything, be it your home, car or bike, it’s easy to underestimate their actual value, or in other words, how much it would cost to replace them like-for-like. It can also be tempting to downplay how much something is worth to get a cheaper quote. Whatever the reason for undervaluing, the bottom line is that you will end up underinsured. In the case of a claim, you may find that either the payout you receive doesn’t cover the replacement cost or the insurer chooses not to payout at all.
In short, saving a few pounds on a premium now could ultimately cost you far more in the long run.
The importance of not under-insuring
A common misconception is that an insurer’s quoted level of cover will cover possessions up to that value, regardless of the total value of the possessions, which is 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 total amount. An insurer could either not pay a claim, a penalty for underinsuring, or apply an “average clause” based on the level of underinsurance. 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 actual value. It, therefore, makes sense to have insurance cover for the true 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, a mountain bike, or any other two-wheeled steed, it costs you a pretty penny if you’re looking to get it insured. Therefore the last thing you want to do is under-insure it so that, in the event of a claim, you cannot replace it like-for-like. It’s vital to give an accurate value of your bike or bikes when arranging insurance. An accurate valuation is critical if you have several cycles 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 ensure you get an appropriate insurance cover. To help you calculate the value of your contents, many simple-to-use home contents calculators should help give you an accurate idea of the total value of your possessions.
If you would like to discuss your insurance needs or better understand how to calculate the value of your possessions, including your bikes, drop us a line, and we’ll be happy to help.