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We have written about his before, but it’s something we know can cause great distress at a time when you may have suffered a loss that is subject of an insurance claim, so we thought it well worth raising the issue again.

Whilst the majority of individuals and businesses probably feel they are insured adequately, are you 100% certain insurers would agree with you if you had a claim? They will accept your sums insured when the policy is taken out, but may use their own experts to check them when a claim is made!

It is more important than ever to ensure you set your sums insured at the right level.

At a time when people are looking very closely at costs, it can be tempting to leave sums insured at levels lower than they should be to avoid increases in premiums, or perhaps not really appreciating the cost of replacing items or rebuilding property, and inadvertently having policies with sums insured that are too low.

Don’t make the mistake of thinking that insurers will pay up to the sum insured, and anything over that amount is uninsured.

A simple example: If your property should be insured for £200,000 and you insure it for £100,000, you are 50% underinsured. If you have a claim for say £40,000, insurers would pay £20,000, leaving you to find the other £20,000!

We would strongly recommend that you take a little extra time to fully assess the values you have at risk, and ensure the sums insured are adequate. Should you have any doubts at all as to how to set your sums insured correctly, contact your insurance broker. They will be able to advise you in greater detail on how your insurers will base their settlement in the event a claim is made.

In certain circumstances, for example when setting a sum insured for rebuilding your property it may be advisable to look at obtaining professional advice. The consequences of not having adequate sums insured has never been greater, and can certainly be far more expensive than the additional premium that may be charged to ensure the cover is adequate at inception or renewal of your policy.

If you have concerns about what increasing your sums insured might do to your premium, speak to your broker. They may be able to increase your excess a little to offset a premium increase, or you may be carrying cover you no longer need. Whatever you do, please don’t ignore it. The consequences could be very expensive!

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