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How 'Index Linking' Protects Your Property

Owning property is a big investment, and in today’s economy, it’s crucial to protect it. With prices going up everywhere, the cost to rebuild or repair properties has also increased. This is due to more people wanting to buy, problems getting supplies, not enough workers, and high energy prices.

What Can You Do?

Indexation is like a safety net for property owners. It helps adjust the value of your property on paper, making sure your insurance covers the actual cost to rebuild or repair if something goes wrong. This means, if disaster strikes, you won’t be left struggling with bills.

How Does Indexation Work?

Insurance companies use a method, mostly based on guidelines from experts (RICS’ BCIS), to calculate indexation. This method considers different costs like materials, labor, and consumer prices, keeping your property value in line with rising prices.

Remember to Update Regularly

It’s important to use indexation every time you renew your insurance. This ensures your property’s value on paper doesn’t fall behind its real-world rebuild cost, giving you full coverage in case of any claims. If you forget to do this, you might find your insurance falling short.

In recent years, the rate at which values are adjusted (indexation rates) has been higher than usual due to economic conditions, sometimes reaching up to 19%. This reflects how rising prices are affecting the cost of claims.

Different Companies, Different Calculations

Keep in mind, different insurance companies might use different methods to calculate indexation, but it’s your responsibility to decide whether to use indexation and to make sure your policy reflects the correct values of your property.

Regular Check-ups for Your Property

The value insurance companies provide isn’t specific to each property and can sometimes be off the mark. So, it’s wise to have your property’s rebuild cost assessed every three years while using indexation in between to keep things in balance.

Regularly updating your property value and having periodic assessments are practical steps to ensure your investment is well protected against any unforeseen events. By doing this, you can secure your investment and enjoy peace of mind in these challenging times.


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