Outside the day to day running of your farm the farmhouse is often the place where conversations take place and decisions are made. It’s a key part of the farming business but it’s also your home. So, when it comes to insurance not only is it important to ensure you’ve got all aspects of the farming business covered, it’s just as important to make sure your farmhouse and its contents are covered too.
Buildings insurance will cover the structure of your home such as the walls as well as patios, fences, drives and more that on the same premises. Whereas, contents insurance covers your possessions including furniture, electrical equipment and appliances. It’s essential you make sure your sums insured, under your farm combined insurance policy, is right as this will be the maximum amount your insurer will pay out in the event of a claim.
Do you know how much it will cost to rebuild your house?
This is the question you should consider when thinking about the amount of sums insured you want to specify under your buildings insurance. Many people assume its right to base their sums insured on the market value of their property, however this is not the case. The sums insured should be based on the cost of rebuilding your property, taking into account the cost of demolition, planning and other fees which are often overlooked.
Claims manager Mark Jones says underinsurance is becoming increasingly common and can have significant financial implications. That’s why when it comes to buildings insurance it’s important to remember to base your sums insured on the rebuild cost, and not what you paid for the property or its current market value.
Example of underinsurance
One of our customers had insured their 4 bed property at £265,000. The property suffered severe damage. The actual rebuild cost was calculated to be over £900,000, resulting in a significant element of underinsurance. This was an extreme case but it emphasises the need to make you’re your sums insured is right.
Do you know the value of the contents you own?
It’s scary how the value of your contents can soon add up. According to the Association of British Insurers (ABI) In 2015, the average home has contents worth £45,000*
With developments in technology, more and more households have laptops, smart phones, tablets and Smart TVs, all of which are expensive items that need to be covered under your contents insurance. For higher value items such as jewellery you’ll often need to take out specific cover and declare the value for each item. With many of these items their value increases with age, so if you’ve had a something such as a diamond ring for a number of years, it’s recommended that you get it valued by a professional. In the event of a claim the valuation can also act as proof and is a way of making the claims process simpler.
When valuing your contents create a checklist and look at what’s in your house room by room. When deciding whether something is worth including in the sums insured value, just think, what would it cost you to replace it?
In many households items can accumulate over a number of years without you realising, so before renewing your farmhouse insurance ask yourself “when was the last time you checked the valued of your sums insured?”
And remember, if you lose or damage an item most insurance policies will offer “new for old” cover which gives you peace of mind when claiming on an item as you’ll get a like for like replacement or equivalent product. Some insurers many offer you indemnity or “wear and tear” cover. This is often a cheaper option as it will only cover you for the condition the item was in at the time of the claim. Make sure you check what’s covered before taking out your farmhouse insurance.
Sources:
*https://www.moneyadviceservice.org.uk/en/articles/do-you-need-contents-insurance