Insurers use index linking, applying the indexation to the sums insured, to increase the premium to protect your interests. The danger is that not increasing the sums insured will cause you to be underinsured and therefore will be subject to the average clause which means any claims settlement would be reduced by a percentage based on the underinsured amount which may not be enough to pay the true cost of rebuild/repair/reinstatement. See our guide on the average clause and underinsurance which goes into more detail.
β‘ What can I do?
π Ensure the amount you put as the declared value (rebuild cost) at the start of your policy reflects the true value it will cost to rebuild it.
π Ensure other declared values on specified contents, computer equipment, plants and machinery are as accurate as they can be.
π Check the indemnity period for business interruption cover to account for supply chain issues and delays.
π Consider using a valuations expert for specified items and a rebuild cost assessment which Access clients can obtain through us at a preferential rate
If you donβt have an independent broker like Access looking after your insurance, then now may be a good time to review your insurance with one of our experts. We can help you make your insurance cost-effective, so you only pay for the cover you need.
π Visit our blog for the full article on claims inflation:
What is claims inflation and how does it affect your insurance premium?