How many UK homeowners are walking an insurance tightrope (it’s more than you think)?
It’s hard to get an accurate figure on how many homes are underinsured as it tends not to come to light until they need to make a claim. There’s also the fact that much of the research into this is put together by insurance companies who have a vested interest in people being well covered. In 2014 one industry expert believed up to a third of homeowners were underinsured. In 2015 a study from Datamonitor suggested between 70-75% of wealthier homeowners were underinsured. Whatever the actual figure is, it’s clear that there is a problem with homes being underinsured.
What does flood insurance cover?
Flood insurance is usually included in standard buildings insurance but it doesn’t cover everything. Basic policies cover the cost of drying out, repairing and restoring your property, fixtures and fittings including the cost of removing debris and any professional fees.
What flood insurance doesn’t always cover is alternative accommodation fees and replacement of contents.
Why are people underinsured?
Most good insurers will make sure that a policy provides sufficient cover for drying out and repairing. The problem is that homeowners do not check their policy for alternative accommodation cover and often underinsure their contents. They may do this to keep the cost of insurance down. If they are affected by flood and find themselves underinsured, it’s too late to do anything about it.
If you have to evacuate due to flood then you can be displaced for months while the property is being restored. In some cases people are able to stay with family or friends but where this is not possible alternative accommodation is needed. Hotel bills can soon add up and if the insurer isn’t paying then you have to foot the bill yourself. The cost of covering both a mortgage and alternative accommodation can financially cripple homeowners.
Contents insurance is probably the biggest area where people are underinsured. Many people forget to include the cost of white goods, carpets, furniture and curtains when calculating the amount of cover they need. It’s easy to focus on high ticket items such as TVs and computer equipment but forget about clothing, shoes, toys and books. It is important that you have the right level of cover because otherwise you could find yourself extremely out of pocket.
If you are underinsured the best case scenario is that the insurer will pay out the total amount you are covered for and you will have to pay for anything else. Unfortunately, some insurers may apply “averaging” which means you only receive a proportion of the claim. In worst case scenarios insurers have a clause whereby if you are underinsured they don’t have to pay you anything at all. This is why it is vital to ensure you have the right amount of cover and also understand the terms of your policy.
How do you calculate the value of your contents?
The average homeowner’s contents equate to 20% of the value of their home. This is not an exact way of calculating the cover you need as it will be more for high earners or those with hobbies that involve specialist equipment. Photographers, art collectors, cyclists, musicians; all may have valuable items that need to be insured.
The best way to calculate the cover needed is to go room to room and list all the items that would need to be replaced if your home was damaged by fire or flood. You need to think about how much it would cost to replace each item; not how much they cost when they were purchased or how much they are worth now. You also need to include items that are stored away in basements, garages, sheds and even lofts.
Don’t be tempted to underinsure. Although you may not think you are at risk even a small amount of water can cause a lot of damage and good insurance is worth investing in.
How to make sure you are adequately covered?
Ensuring that you have calculated the value of your contents correctly is a good start. You also need to check the policy for the definition of contents and building. Does your policy cover items in your garden or shed? Reading the small print may be time consuming but you need to check for any exclusions or clauses that may affect your claim. These could include a “conditions of average” clause or single article limits. If you have high value items these may need insuring separately.
How to protect items from damage
Good insurance will cover the cost of replacing items but not all items are replaceable. Signing up for flood alerts is a good idea. If you know that your home is at risk of flood you can put measures in place to protect items of sentimental value. Moving them to the highest part of your home or sealing them in water tight containers or packaging can prevent them getting damaged. It is also a good idea to back all photos up digitally.
If there is likely to be flooding in your area then it can be beneficial to take up ground floor carpets and wrap furniture items in plastic sheeting to limit the damage.
Can you salvage flood damaged items?
In some cases it is possible to salvage some of the items damaged by flood. Clothing can be disinfected and washed if it isn’t too badly spoiled and even carpets, curtains and rugs can be saved. Items of furniture may also be restored if the water hasn’t damaged them too much.
Flood water can often be unsanitary so it is really important that any items you do plan on saving are cleaned thoroughly and dried out completely. Drying items is very important to prevent mould or mildew. Spores from mould and mildew can cause respiratory problems and serious illness.
How does Arxell benefit homeowners that are underinsured?
Although Arxell can’t prevent floods or stop people being under insured it can help dry properties out faster. In fact, tests show Arxell reduces drying times by up to 75%. This reduces the amount of time that homeowners have to be in alternative accommodation. This is a huge benefit to both insurers and homeowners. Whoever is covering the cost of the bill will have the cost substantially reduced.
The other advantage to homeowners is that Arxell can dry out carpets and individual pieces of furniture quickly which can mean that more items can be salvaged. This is particularly beneficial if the items are extremely valuable, are irreplaceable or have sentimental value. The more items that can be salvaged the lower the cost of replacing them. The Arxell Drying System can be built around items of furniture. The drying air is focused directly on to the wet item and is distributed evenly. Because the air is targeted at the wet surface, it dries out much faster than using other drying methods. With some items the faster they are dried the more chance there is of saving them.
Arxell has been designed to improve the flood restoration process. The cost incurred by flood damage is huge and the aim of Arxell is to reduce this cost. If these costs continue to rise then insurance premiums will rise and more and more homeowners will find themselves underinsured in a bid to save money. Arxell cannot stop floods from happening, and it can’t stop the damage they cause, but it can make a difference to the efficiency of the restoration process.
If you would like to know more about Arxell and how it can dry an area up to three times faster than some existing drying equipment then contact us today.