A review of personal insurance is often instigated after an event that has proved complex and arduous. Yet this stress could be avoided with a more proactive approach towards personal risk management.
The first step to an effective risk management process is to identify the risks you face personally and understand what impact they could have. Once a risk is known and the extent of the threat it could pose to wealth, possessions and well-being is quantified, steps can be taken to alleviate them.
As families grow, their insurance arrangements often become fragmented. This may result in the loss of valuable leverage in terms of achieving the most appropriate cover and price. Additionally, the burden of administering and renewing multiple insurance policies can become a time consuming task.
By taking a proactive approach to managing risk, families can maximise the value of insurance and take fact-based decisions on what, when and how to achieve the most effective insurance programme. Impartial professional advice is key when navigating the insurance market and ensuring they secure the best products tailored to their individual circumstances and lifestyle.
A risk review will identify areas of focus; a typical example being underinsurance.
A key factor behind underinsurance relates to the inheritance of possessions. Probate valuations are typically far lower than the replacement cost and this disparity in value becomes greater for items that have been passed down through generations.
It is not until an incident such as fire, theft, loss or damage happens that we really know how good our arrangements are. It is the responsiveness and ability to minimise the stress of difficult situations that is the true value of an insurance programme.
Prior consideration to preferred suppliers and contractors to minimise delays should all be part of a well thought out programme, drawing on the skill of specialist advisers, where appropriate with prior knowledge of specific property and features, to help replace and restore as quickly and painlessly as possible.
The diversity of personal assets presents its own challenges. Language barriers, local legislation, foreign currency and overseas banking issues, exchange rate fluctuations can all impact on claims settlements. Further, adopting a local approach to insurance may leave people with a lower level of cover than they would anticipate compared with the UK.
Personal risks are traditionally regarded as a tangible loss or damage to property. However, the explosion in the availability of personal information, coupled with a lack of awareness of personal security has raised the risk of identity theft and personal safety. It does not require much effort or detective work on the part of the fraudster to come up with a convincing insight into a victim, yet how many people take proactive measures to combat this issue either as a discrete review of travel patterns and lifestyle or as an ongoing focus?
