The start of a new financial year is often associated with tax returns, business planning and fresh financial goals. It is also an ideal time to review your general insurance and check whether the sums insured still reflect the true value of your lifestyle and business assets.
Life rarely stands still. During the past year, you may have renovated your home, purchased new furniture, upgraded your vehicle, added equipment to your business or invested in machinery, technology and stock.
At the same time, construction costs, replacement prices and labour expenses may have risen. If your insurance has not kept pace with these changes, you could be left with a gap between the amount covered and the real cost of rebuilding, repairing or replacing what you own.
What is a sum insured?
A sum insured is the maximum amount listed on your policy for a particular asset or category of cover. For a home, it may relate to the estimated cost of rebuilding the property. For contents, it may represent the replacement value of furniture, appliances, electronics, clothing, jewellery and other belongings. In a business policy, it could apply to buildings, stock, equipment, machinery, tools or other commercial assets.
Choosing an amount should involve more than simply estimating what you originally paid. Replacement values can change, and some assets may cost considerably more to replace today. A detailed review can help you identify new purchases, improvements and items that may have been overlooked.
Protecting your lifestyle
Your home, car, caravan, boat, trailer, sporting equipment and other lifestyle assets may play an important role in how you live and spend your time. These items can also represent a significant financial commitment. If they are damaged, stolen or destroyed, the impact may extend beyond inconvenience. You may face repair costs, replacement expenses and interruptions to family plans.
Take time to walk through your home, garage, shed and outdoor areas. Consider creating a current inventory, supported by photographs, receipts, serial numbers and valuations where appropriate. High-value or unusual items may need to be listed separately, depending on the policy. It is also worth checking limits for items taken away from home, including laptops, cameras, bicycles, jewellery and portable equipment.
Protecting your business
Business owners face a different range of risks. Premises, vehicles, tools, machinery, stock, electronic equipment and customer property may all require protection. However, physical assets are only part of the picture. Business interruption, public liability, professional risks, cyber incidents and equipment breakdown may also affect operations and cash flow.
A yearly review is a valuable opportunity to discuss how the business has changed. Have you increased turnover, hired more staff, moved premises, added services, purchased vehicles or started storing more stock? Have working arrangements changed, or are employees using equipment from home? These developments may affect the type and level of cover required.
Underinsurance can become a serious problem when a claim occurs. Some policies may contain clauses that reduce a claim payment when the declared value is lower than the actual value at risk. Policy terms differ, so it is important to understand how your cover would respond before a loss happens.
Make the review part of your annual routine
Set aside time each new financial year to gather policy documents, update asset lists and compare sums insured with current replacement values. Do not focus only on the premium. Review exclusions, excesses, limits, optional benefits and the circumstances that could affect a claim.
General insurance can help protect the assets that support your lifestyle, income and future plans. A qualified General Insurance Broker or Adviser can help you assess your risks, review your sums insured and explain the available options. Professional advice is important because the right level of cover depends on your individual circumstances, assets and business activities.
If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.
This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.
(Feedsy Exclusive)
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.