Andy Barrow posted on
March 03, 2010 20:19
If you are one of the increasing number of Brits with property abroad, you need to take great care when reviewing your insurance coverage. We all notice the effects of the falling exchange rate on the price of a bottle of wine or a hire car but it is easy to forget the impact on insurance values.
On 1st January 2007 the £ was worth €1.484. Today it is nearer €1.10, a fall of 26%. If we assume a rebuild cost of €300,000, an insurance policy issued in sterling in 2007 would be for £202,000. At today’s exchange rate, the sterling rebuild cost would be £272,000, potentially leaving the policyholder some £70,000 out of pocket. If the furniture is also purchased overseas, then in the worst case scenario the loss will be even greater.
The £ has fallen similarly against the $ from $1.958 to $1.49.
We normally advise clients to insure their overseas property in the UK where they can, as policy terms and conditions tend to be superior. However, the declared insurance value is the maximum that would be paid; there is no policy that takes account of exchange rate fluctuations.
We have a great deal of experience insuring overseas property and this is one aspect that we highlight to clients. Furthermore, our in-house investment management team can give guidance to our insurance advisers as to the likely trend in exchange rates. A year between renewal dates is a long time in the currency market and our broad expertise in these areas adds real value for clients and ensures peace of mind.
If you want to know more, please contact Andy Barrow on 01438 345716, or email him.
Main theme for this blog post: