10 October 2023

Raising the roof on the taboo of underinsurance

By Kevin Meek New Business Senior Account Handler

We hosted a webinar last month with LNPG and Richard Graham: Lock-In: Sorry, You’re Not Covered (with Protect My Let) – YouTube

If there’s scary one word on the lips and minds of both those renting out properties and the specialist brokers that arrange property insurance, it’s underinsurance. And while the word itself carries an element of obvious meaning, the nuances of the term and consequences of falling foul of underinsurance requires a deeper dive. Which is why we called in the big guns who recently explained it all in a concise yet thought-provoking webinar.

Here’s a quick and dirty summary, but we recommend that you watch the full session as Richard Graham. Head of Claims and Risk Management for Aston Lark, gives a very insightful and honest account of the dangers of yes, you’ve guessed right, being underinsured.

Here’s an overview of what to expect.

  1. A full definition: Underinsurance, in short, is not insuring your property to the right level, thus leaving it and you exposed to not getting an adequate pay-out if it’s damaged or even destroyed.
  2. An equation to illustrate: It all comes down to an A,B,C of who will do what in the vent of a claim, and what happens when a part of that sum total doesn’t add up or is missing.
  3. It’s all in the legislation: A look at the Duty of Fair Presentation law (2015) expands on what the claimant can expect back, what is fair, and what is meant by the “adequate cost to rebuild”
  4. Look at the history: Richard then gives us a necessary history lesson that the issue of underinsurance has been brewing and growing since the start of the 21st The main areas that cause people to underinsure? Confusion on what it is, cost of premium, relying on an old valuation, and the difference between rebuild and retail value.
  5. There will be consequences: Ignore or overlook any of the above at your peril. By the time something goes wrong and a claim is dismissed, it’s too late to do anything. But doesn’t action involve regular surveys and checks which cost money?

Discover more about how landlord insurance protects your property.

  1. Scary stats: We don’t like to hover on the bad news, but the stats that are shared (70 per cent of properties are underinsured, and an uplift to sum insurance of 30 per cent is needed, or among the 2.5 million landlord properties, 1.75 million are underinsured) will shake anyone out of a complacent state.
  2. The 2021-22 problem: A bit like the ten biblical plagues (less frogs and locusts, but just as impactful), recent years have given the world Covid-19, serious issues of demand of building materials outstripping supply, impact of Brexit, a shortage of HGV drivers, and the Ukraine war. All of which add costs, dent resources, and make the chances of cutting the insurance corner even greater.
  3. More scary stats: As of 2023, of 3000 valuations undertaken, 73 per cent were underinsured, with many more numbers shared in the webinar.
  4. Three wise monkeys thinking: All of which leads to policy reticence and avoidance by every party. Nobody wants to talk about underinsurance, but everyone SHOULD not only be talking about it, but taking appropriate action.
  5. The silver bullet solution: We’re not going to give too much away here, as we’d like you to watch the webinar. However, there is a way to get an up-to-date valuation every three years and therefore arrange the right property and buildings insurance that doesn’t cost the earth. Here’s a clue and it’s called an RCA.

Watch the full, frank, and unmissable webinar or go straight to our quote page here to ensure your rented property is covered for all eventualities.

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Watch the full, frank, and unmissable webinar or go straight to our quote page here to ensure your rented property is covered for all eventualities.

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