What is underinsurance?
Brief definition: Underinsurance occurs when the insured amount is lower than the actual value of the insured property. In case of damage, you then receive only a proportional payment. For example: if you are insured for €50,000 but the actual value is €100,000, you receive only 50% of your damage.
How does underinsurance work?
The proportional rule applies:
- Calculation: (Insured amount / actual value) × damage = payment
- Example: €50,000 / €100,000 × €10,000 damage = €5,000 payment
- This rule applies to most property insurances
Preventing underinsurance
- Regularly check your insured amounts
- Have a valuation done for valuable items
- Use index clauses in your policy
- Report major purchases to your insurer
Guaranteed value
Some policies offer guaranteed value clause:
- No underinsurance deduction in case of damage
- You must have provided correct information
- Often only with regular valuations
Frequently asked questions about underinsurance
How do I know if I am underinsured?
Compare your insured amount with the current replacement value of your property. Include renovations and new purchases.
Can the insurer always apply underinsurance?
Only if underinsurance actually exists and it is stated in the policy conditions. With a guaranteed value clause, no reduction applies.
What can I do about underinsurance after damage?
Dispute the underinsurance calculation if you believe it is incorrect. Have the actual value determined by an independent expert.
Where can I get help with underinsurance in Utrecht?
A lawyer or insurance expert can help you dispute underinsurance. Contact us for advice in Utrecht.