Over Sold Cover On Buildings And Contents Insurance

[chcas]

I have been looking at my sister-in-laws building insurance she took out with her mortgage. she is covered for £1,000,000 for buildings and £50,000 for contents. The market value of the house is approx £200k and averagly furnished. Is there a case for being mis-sold cover. I am trying to work out when the policy was taken out, I suspect 2007 when she changed her mortgage.

[whistonian]

This is probably the Companies standard cover ,many companies use similar figures. Best to check with her company.

[Gavmacp]

I concur with chcas. Mother was with the same insurance company for years but when it got above £1000 pounds I checked for a better deal and saved her over £600 pounds.

[Gavmacp]

Oops I concur with whistonian!

[bhg481]

The market value is irrelevant; it's the rebuilding cost which matters.

Some companies now just use a maximum value for both buildings and contents based on the type of house and district, rather than you having to specify a value. I suspect it saves on arguments when a claim is made; many people don't realise that if you under-insure your house you don't get the full amount if you make a claim. In other words, if your contents are worth £50,000 but you have only got them insured for £25,000 and you have a small fire which wrecks your £1000 carpet, they will only give you £500.
Having said that, the cover on your sister-in-law's house does look excessive. Who took out the cover and why did they agree to that value?

[Deskdiary]

The premium would have been calculated on the sums insured your SIL gave them at the time.

The sums on the policy are 'blanket' limits. These are in your SIL's favour as it avoids the risk of under-insurance.

Market value bears no resemblance to rebudiling costs.

Your SIL has not been over sold.

[chcas]

I have been on a comparison site and cover is between £100-150, she is paying over £400 which is why I questioned it. Its the value of the cover that pushes up the premium.

[Gavmacp]

From my experience it seems to be the more loyal you are the more you are charged.

[fiction-factory]

You are right that you need to shop around- and I usually find I can leave my insurer then come back as a new customer and get a better deal.
But, as for being 'over sold' , many companies do now have minimum levels of cover for the reasons others have given