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Underinsurance a problem

Underinsurance a problem

Category: Home insurance

Updated: 25/03/2009
First Published: 24/03/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Homeowners have been warned that they are putting themselves at huge risk of incurring significant costs by not insuring their properties to their full reinstatement value.

A sample of 128 valuations carried out by Norwich Union found 86% of properties were markedly underinsured, with the difference totalling some £314 million.

Mike Colmans, property owners underwriting manager at the insurer, said that as many as half of the claims for damage to buildings are being settled below the cost of reinstatement.

"Previously, property owners would have had the option of borrowing money to meet the surplus cost but given the economic climate and limited access to credit, this may not be possible."

Roger Corp, of valuers Barrett Corp & Harrington Ltd concurred, saying: "Whilst property owners may be looking for savings in these troubled times, it is important that this is not at the expense of insurance cover."

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