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Could you end up overpaying due to underinsuring?

Do you know how much your home insurance covers? You may think you’ve done everything right by getting insurance and there’s nothing else you have to do. But if you haven’t updated your policy to cover any new purchases, you could end up out of pocket.

If you have new items in your house you could be underinsured. And this could be anything – new purchases, gifts or an inheritance you want to protect. The value of your home insurance policy may not cover these and, if you need to claim, you could end up paying out far more at a time which is likely to already be stressful.

If you’re part of the quarter of homeowners who have been with the same insurer for five years or more, or 13% who haven’t changed their insurance for 10 years or more, it’s even more pertinent to make sure your policy is accurate to what you have now.  

The research from comparison website Gocompare has also shown less than half (48%) of content policies automatically index-link their policies. Index-linking helps keep the value of your policy up in line with increases in prices.

Avoid underinsuring

If your insurance doesn’t accurately cover the full value of your contents, any claim could be insufficient to cover your losses. All you need to do to avoid this is update your insurer with any changes in your circumstances and ask them to increase the sum to ensure you’re covered.

Unlimited sum insurance policies are also available, which means all of your contents are covered without limit so you don’t have to worry about underinsurance.

If you want accidental damage cover, or personal possessions cover, these are often optional extras. So if you want them, check they’re a part of your policy. Take a look to see if you get a ‘new for old’ policy as well. This means if any of your items are damaged or lost, you can replace them with new ones.

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