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10 million homes could be wrongly insured

adamlewis
Written By:
adamlewis
Posted:
Updated:
22/12/2015

Over two-thirds of homeowners don’t know the rebuild cost of their properties, and may not have adequate home insurance cover.

Up to 10 million homeowners could be risking the roof over their heads because of under insurance, according to SunLife.

Recent research conducted by the insurer found that 67% of homeowners don’t know the ‘rebuild cost’ of their home, with more than a third (35%) wrongly assuming it is the same as their house value.

Simon Stanney, director of insurance at SunLife, said you should find out this cost before taking out home insurance: “When you buy buildings insurance, you will need to know the ‘rebuild cost’ of your home, which is the amount it would cost to completely rebuild your home if it was destroyed beyond repair.

“Unfortunately, two thirds of homeowners don’t actually know what this is or how calculate it properly. Contrary to popular belief, it is not the same as the current market value of the property, as more than a quarter (28%) of homeowners believe.”

Having an accurate figure can help prevent over or underinsurance. If you over insure, you could be paying out hundreds of pounds in unnecessary premiums, but if you underinsure, the consequences could be very serious, as Stanney explained.

“In the unfortunate event that your home requires a complete rebuild and your buildings insurance is not sufficient, you will be left to cover any difference in price. Worse still, if your property is mortgaged you could be left with no home and thousands to pay back to your lender.”

To get an accurate rebuild cost you can pay a surveyor around £250 to carry out detailed measurements of your house and then prepare a professional Rebuilding Cost Assessment.

Or you can avoid the issue of over or under insurance by shopping around for a policy that doesn’t ask the question. There are a number of providers out there that offer buildings insurance with a standard rebuild cost cover, including SunLife’s new home insurance.

Stanney said: “Despite the fact our research shows that most people don’t know what rebuild cost is, many policies still ask for it, and this is an example of how some insurers are not thinking enough about their customers. At SunLife we’re doing things differently by cutting out questions like that, and making it easier for customers to get the cover they want, without paying for features they don’t need.”

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