A year since storms wreaked havoc on parts of rural Suffolk, where picturesque black and white cottages were among the properties flooded, some owners are still not back in their homes. Despite having thought they were fully insured, some of these house owners are badly out of pocket.
The catch was in the small print – you have to insure for the rebuilding costs of your home, says a clause in one typical policy. In a recently constructed house, rebuilding is generally a lesser amount than the market price, since bricks and mortar are comparatively cheap materials. But if a house was constructed of oak beams, wattle and daub, or other unorthodox materials, the rebuilding cost can be far greater than the market value.
So instead of paying the full cost of extensive repairs, typically £140,000, although much less than the total value of the house, some insurance companies have been deducting 20% for “underinsurance”. The only challenge to this arbitrary decision is an independent survey, which may or may not come to a different conclusion.
The companies blame the brokers for not alerting their clients to this clause, while the brokers refuse to comment. So, when you insure, take extra time to read the policy carefully.