With inflation already at a 40 year high and predicted to rise further in 2022 eventually reaching an eye-watering 10% in the final quarter of the year households and businesses across the UK are feeling the pinch.
One such implication is the increased risk of underinsurance, when the level of insurance taken out is not enough to cover the cost of rebuilding, repairing or replacing insured items following a claim. If an insured asset has risen beyond the value declared in an insurance policy, this can also create an underinsurance risk.
This is a risk that applies to both personal and business insurance, since both are affected by high rates of inflation. It also applies to a wide range of insurance types, any insurance cover where the cost of replacing or repairing an asset being insured is rising due to inflation.
Consequences of underinsurance become apparent when the time comes to make a claim. Insurers commonly apply a ‘Condition of Average’ in cases of underinsurance. This means you may recieve a shortfall in your expected claim settlement or in more serious cases your claim being voided altogether.
Consequently it is therefore important to address this risk now, rather than waiting for your renewal.
Inflation is as much today’s problem as it is tomorrow’s.
Contact Risk Hub on 01926 674 875 or email [email protected] to see how we can help you with Property Insurance.
