Over the last year, we’ve all seen a cost-of-living increase. With inflation having reached a 40-year high, we have been spending time as a business understanding the reasons behind it, the implications for insurance, and most importantly, how we can support and protect our valued customers.
Why Has Inflation Risen?
- The War in Ukraine
- Other Societal Factors
What Impact Does Inflation Have On Insurance?
Claims inflation & the impact on premiums:
Along with general rate increases, we can also expect to see large inflationary rate increases to reflect the claims cost inflation that insurers are experiencing.
Increased Potential For Underinsurance
Underinsurance can have serious potential consequences. In the event of a claim, the average condition could apply whereby the final settlement could be reduced proportionally to the degree of under-insurance. It can mean dramatically reduced claims payments, leaving you having to find additional funds from your own pocket to finance repairs, or in the worse cases, refusal to pay claims entirely as insurers deem the sums insured declared to be inaccurate, that misrepresentation or fraud has taken place and they withdraw cover entirely.
Please note the reinstatement value is not the same as the market value. In summary the market value is how much the property will sell for on the open market. An insurance reinstatement valuation however is the cost of rebuilding the entire property/building in the event of a major event such as a fire, which will include the cost of demolition, site clearance, professional fees and rebuilding of the property to the same type and standard as it was before the major event.
Contact Coversure Palmers Green
Call: 0208 617 9471
We are here to help, our team will work with you throughout the policy period to ensure you understand the basis of cover, how to best determine your sums insured, what inflation protection is built into your policy, as well as the implications if you get it wrong.
If your policy is up for renewal it’s important to contact us in advance to allow time to re-evaluate your sums insured as surveys or valuations may need to be arranged. We can provide assistance with building valuation. If relevant, your business continuity plan may also need to be reviewed.