Underinsurance – The Importance of Valuations

What is Underinsurance?

Underinsurance is a major issue in the industry – many reports suggest that around 2/3 of homes are underinsured for their rebuild cost. Unfortunately, the same is true for the general contents and valuables in those homes. Underinsurance occurs when a client is insuring their contents for a lower figure than what it would cost to replace and often this is only found when a claim is made and often too late. While this can be frustrating for the client, it is their responsibility to ensure that the amounts are correct on their insurance policy. This can be done by having a professional valuation.

How Could I be Underinsured?

Look around your home and think in the event of a disaster what would the cheque need to be to replace them, and which items should I specify to your insurance policy. There might be more items than you think. That old antique dining room table you bought years ago, that you feel has little value, might cost you more to replace from an antique shop. For insurance purposes, contents and valuables need to be insured for full replacement value.

Here are some examples of home contents items going up in value over time^*:

• A George Smith medium arm, signature model settee. The fabric version is £145 per meter and the leather version is £1,870 per hide. The insurance replacement value in 2019 was £6,300 and the value in 2024 was £9,000 which is a 42% increase.
  
• A Miele washing machine, model WWV980 WPS Passion. The insurance replacement value in 2018 was £2,000 and in 2024 it rose to £3,500 which is a 50% increase.
  
• A pair of Tiffany & Co. Victoria diamond earrings in platinum. The price in 2003 was £3,100, in 2010 was £4,925, in 2021 was £8,775 and the price today^** is £9,125.
  
  ^*Data from Doerr Dallas Valuations. ^**Data correct as of 30.01.2025

As you can see, regularly getting a professional valuation helps ensure you don’t end up out of pocket when replacing your valuables in the event of a claim or a loss adjuster applying average subject to your policy. It also helps your insurance company or broker by providing evidence of the assets you want to insure, which allows them to set the correct premium.

How often should I get a professional valuation?

As a rule of thumb:

• Watches – every year (this can depend on the model)
• Jewellery – every 2-3 years (the gold price is the highest it has ever been)
• Contemporary art – every 2 years
• General contents – every 4 years

But this is not necessarily a given. You may need to consider shorter timescales depending on:

• Household circumstances that have changed (members moving in or out)
• New items acquired (a purchase, a gift or inheritance)
• Circumstances (the death of an artist, wars, pandemics)

What are the benefits of using professional valuation services?

Knowing the true value of the items you have in your home can be very useful when it comes to selling (capital gains tax) and when it comes to insurance (claims). Using a professional valuer will give you peace of mind and a clearer vision of what you own. Basing your thought process on the price paid many years ago, could leave you in a very difficult position i.e. underinsured.

The benefits of a professional valuation are as follows:

• Proof of ownership
• Convenience of the valuer coming to your home
• Having a true replacement value
• Gaining a full understanding of asset values
• Useful for insurance purposes

What should you look for in a valuation?

It is important to look for a valuation service that has qualified people for each type of product and to check that their knowledge is up to date. Having this expertise will give you a thorough understanding of your assets. A professional valuer ought to be able to evidence they have PI cover in place, and they can share this with you, together with their terms of business. One person cannot do everything. 

In a valuation, you should look for:

• A detailed description of the item, including dimensions, weights and overall condition.
  
• Details of stone(s), including size and quality. If the stone is certified, the report number and date should be noted within the description, as well as the name grading of the laboratory.
  
• A description of metal and the overall setting.
  
• Any marks (such as hallmarks or maker’s marks).
  
• Value, which should be dated and that confirms the purpose and type of valuation.
  
• Confirmation that clasps and settings of jewellery have been checked.
  
• Photographs.
  
• A qualified valuer with experience of the asset(s).

High-value home insurance

When it comes to declaring valuables on your home insurance policy, it is important to specify items such as art, antiques and jewellery so that they are covered for their full value. Avoid listing them under general contents if they’re individually worth over £1,500, though this amount can vary. A high-value insurance broker like Anthony Wakefield & Company will advise you to list valuable items individually and obtain a professional valuation, helping you avoid underinsurance when it comes to a claim. If you make a claim, your policy should cover the full replacement cost of the item as new.

For more information on independent professional valuations, contact Doerr Dallas Valuations.

For information on high-value home insurance and underinsurance, speak to the friendly brokers at Anthony Wakefield & Company by calling 01306 740 555 or contacting them online here.