Are you aware of the principle of underinsurance and its consequences in case of a claim?
Underinsurance exists when the insured property is insured for a value lower than its real value.
In such case the insured has to contribute to the repair cost in case of a covered claim because, in reality he has insured only part of the total value of the property.
Real Property value = €200.000
Insured value = €100.000 (50% of its real value)
Damage = €10.000
With the above example, in case of a covered claim for a damage of €10.000, the insurance company will pay only €5.000 and the insured will have to bear the cost of the remaining €5.000. This is because, in reality, only 50% of the actual value has been insured and therefore any costs shall also be shared 50% – 50% between the insured and the insurance company.
Did you know that a large percentage of the insured households in Cyprus are underinsured because policyholders seek to buy cover only for the amount, they have loaned from a bank institution?
Make sure that you properly insured and avoid any unexpected surprises. !
For more information or if you have any concerns regarding underinsurance please contact you insurance intermediary or leave us your comments using the form below!