Common misassumptions when changing a household insurance policy mid-term

Many people think that changing their household insurance policy mid-term has no implications. In reality, changes can affect a policy’s coverage, cost, or the policyholder's obligations.

Here are the top five common misassumptions to be mindful of when making mid-term changes.

 

Misassumption #1: The current insurance policy will automatically cover my changing circumstances.

This is a very common misassumption. Not all changes to your property or circumstances are automatically covered by your existing insurance policy. For example, major renovations, adding high-value items to your contents, or starting a home business may all require you to notify your Insurer.

Failing to do so could result in a claim being denied. To avoid this, check your policy's conditions or consult your insurance broker if you've experienced a change of circumstance. They will help you to update the policy so you remain fully covered.

 

Misassumption #2: If I make changes to my policy, my premium will remain the same

Any changes can affect your premium. For instance, adding expensive belongings to your contents cover, increasing the insured value, or making changes that increase risk on your property (like adding in a swimming pool) can result in higher premiums. Conversely, security upgrades at your property might bring lower costs.

It is essential that your policy fully insures everything you need it to. Don't be tempted to ignore telling your insurers, as this may lead to you being underinsured in the case of a claim. See the following assumption.

 

Misassumption #3: I don’t need to tell my Insurer until my policy’s annual renewal.

You are obligated to inform your Insurer of any material changes as soon as they occur, not just at renewal. Delaying the notification can invalidate your policy or lead to the Insurer rejecting a claim - especially if the change impacts your home's risk profile.

So, when you make alterations to your property or contents, be sure to alert your Insurer or insurance broker.

 

Misassumption #4: I can add an additional person to my policy easily and without any consequence

Adding a co-owner or additional insured person can be more complex than initially assumed. It might require consent from all parties involved. It can also impact the terms of your insurance policy, especially if the new person has a different risk profile to you (for example, if they have a claims history).

 

Misassumption #5: Cancelling my policy mid-term has no penalties

Cancelling a policy mid-term can result in cancellation fees, or a pro-rata refund that may be less than expected. If a claim has been made within a policy period, no refund will be issued by the insurers.

 

Summary

When people's circumstances change (such as extending their property or purchasing high-value assets), it is important to alert the insurance provider as soon as possible.

While changes may prompt the premium cost and conditions to alter, it’s worth informing them.  This will avoid a case of underinsurance or an insurer disputing a claim because the new circumstances and conditions were at odds with what had previously been insured.

It's also worth remembering that not all changes are additions. If you've divested a high-value asset for example, it's important to alert your Insurer too. This may warrant an insurance premium reduction.

 

Can we help?

Fidentia's private client specialists have an excellent track record in helping individuals and their families review their insurance coverage alongside changing personal circumstances. If you feel your current policy needs to be brought up to date, call us for an initial chat on tel: +44 20 3150 0080 or contact us via the website.