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The perils of Under Insurance

Underinsurance occurs when the sum insured on your insurance policy — that is, the amount listed as the maximum the insurer will pay out if you make a claim — isn’t enough to cover the full cost of rebuilding, repairing, or replacing your building asset or home and its contents.

Your engaged broker or Insurer does not provide the value figure for your insured assets the figures noted on the policy is directly your responsibility.

It is becoming evident to us, if you have building investments or are a homeowner, you may not have enough insurance to cover you in a disaster. Insurers apply various indexing every year, however recent research by Canstar concludes that 83% of Australian homes and a slightly lesser figure for buildings are underinsured.

How you may be at risk of being underinsured

It can be hard to know whether you’re underinsured — many homeowners don’t know the true value of their home. Here are some ways you can wind up underinsured:

  • Miscalculating the true cost of replacing your home and contents.
  • Not accounting for additional costs like removing debris after an incident or the site works required to re-build.
  • Lowering your premiums without careful consideration.
  • Increased repair costs due to inflation
  • Spikes in building costs thanks to materials increasing in price or high demand for construction services after a major event.
  • Supply chain concerns & delays. Up to 60% of all materials are imported.

Underinsurance has become increasingly evident for a range of factors and the only way to determine current needs is to seek advice from construction cost experts.

One solution Adroit have accessed is to engage the services of an independent firm of Quantity Surveyors who calculate the amount of materials needed for building work and how much it will cost. Note a valuer estimates the value of something to be purchased.

Their replacement report fees commence from $600 plus GST for a single asset.

Please contact David Edwards –  at Adroit Insurance & Risk Ballarat if you would like to have further discussion.