86% of UK homes underinsured

Eighty six percent of properties in the UK are ’significantly underinsured’, according to recent research by Norwich Union.

The home insurance provider surveyed 128 homes, and found £314 million of under-insured property.

Most properties had not undergone a professional valuation for insurance purposes, Norwich Union said.

It added that professional valuations are essential for adequate insurance cover because valuations provided by a bank or estate agency may not reflect the cost of rebuilding a property.

Mike Colmans, Norwich Union’s property owners underwriting manager, said: “Having accurate sums insured on a property is vital to guarantee receiving the full amount in the event of a claim.

“As many as 50% of claims for damage to buildings are being settled below the cost of reinstatement, which could have a significant impact on property owners who would have to fund the difference themselves.”

Claimants are finding it increasingly difficult to meet surplus costs not covered by insurance because the economic climate has reduced available credit, Colmans said.

He added: “When insuring the buildings it is important to remember to include the replacement value of fences, garages and other outbuildings, as these are frequently forgotten but must be taken into consideration when calculating sums insured.”

Recent research by uSwitch.com found that 18% of UK homes have no contents insurance.