Underinsurance occurs when you have not insured the full repair or replacement value of your property/asset. If you are underinsured, your insurer may rely on any ‘Average’ or ‘Co-insurance’ clause in the insurance policy. This means you may not receive full compensation for your loss and would have to bear part of the loss yourself.
Reviewing the sums insured and declared values on a regular basis and at each renewal will help you to ensure that you have maximum protection under your policies.
You need to decide whether to increase the sums insured or declared values of insured property/assets, and whether you require replacement on a ‘new for old’ basis. It is also important to consider other costs such as removal of debris and any additional costs that may be required to replace the damaged property/asset. The value of the property/assets insured may need to be updated if you change locations, renovate or expand your premises, or purchase new property/assets (especially if your purchases are substantial).
In some cases, insured property (like a motor vehicle) may depreciate in value or you may want to reduce the insured values to ensure that you are paying a competitive premium.
If you want to discuss whether insured property/asset values should be changed in your policies, call us today on (02) 4969 8100 for an insurance strategy review.
You can also contact us through the website.