The true cost of underinsurance
Read this case study from a landlord that underinsured their property
Read this case study of a claim where a landlord accidently insured their property for only 71% of the actual value.
In November 2019, a tenant set fire to a property causing extensive fire and smoke damage throughout. At the time of the claim, the property was insured for a rebuild cost of £88,000 but it should have been insured for at least £124,000.
This meant that the property was only insured for 71% of its actual value. The fire claim amount was £35,414 but as a result of the underinsurance, the insurers applied the average and only 71% of the claim was paid out, in total an amount of £24,894.
That’s approximately £10,000 that could have gone towards rebuilding costs that the landlord will never see.This could have been the difference between that landlord being able to bring that house back up to a liveable state or having to sell it on as a write-off.
It’s a situation that could potentially trap owners of the thousands of underinsured properties in the UK right now and it begs the question – with so much to lose, why are so many landlords underinsured?
Is it a deliberate route to a cheaper premium or is it simply the result of general confusion and a lack of information?
More importantly, what happens if you are underinsured and how might you get out from under it or avoid it entirely?
