Many people only discover they are underinsured after a major loss, when the cost to rebuild or replace their assets is far higher than the amount listed on their policy.
What Is Underinsurance?
Underinsurance happens when your assets are insured for less than their current replacement value.
This can apply to your home, household contents, business premises, machinery, equipment, solar systems, stock and other valuable assets.
As replacement costs increase and your circumstances change, the values on your policy can quickly become outdated.
Why Does Underinsurance Happen?
It often happens gradually.
You renovate your home, upgrade your kitchen, buy new equipment, install solar, expand your business or add valuable assets. At the same time, building costs, labour, imported products and equipment prices continue to change.
Your insurance policy does not automatically know about every improvement or purchase.
Without regular reviews, a gap can develop between what your assets are worth to replace today and what they are insured for.
Why Replacement Value Matters
The price you originally paid for an asset may not be what it costs to replace today.
A machine, appliance or piece of equipment bought several years ago could now cost significantly more to replace. The same applies to rebuilding a property after a major loss.
Having insurance does not always mean you have enough insurance.
In some cases, underinsurance could also affect the settlement of a partial claim, depending on the policy wording and conditions.
When Should You Review Your Insurance?
A yearly review is a good starting point. You should also review your cover after major changes, including:
- Renovations or property improvements
- Installing or upgrading solar systems
- Buying expensive household items
- Purchasing new machinery or equipment
- Expanding your business
- Increasing stock levels
- Adding new business locations or activities
- Replacing high-value assets
How Intégro Can Help
Your life and business change over time, and your insurance should keep up.
Intégro can help you review your existing cover and assess whether it still reflects your current needs and asset values.
You have insurance. But do you have enough?
Speak to Intégro about reviewing your short-term insurance and making sure your cover still makes sense for today.