Insurance Indexation
Even though we recently wrote about underinsurance, it's worth looking at the whole issue from another angle. Avoiding underinsurance starts with correctly setting the insured amount at the beginning of the policy. However, less is said about updating it during the policy's term.
Insurance Indexation
This year, with inflation reaching double digits, indexation is essential. This concept, also called indexation, can be explained as an increase in the insured amount, and thus the total price of the insurance, due to rising prices. If the client agrees to insurance indexation, they can be sure that their insurance will remain effective, thus preventing underinsurance. Indexation is a standard service offered by insurance companies with the policy.
On the other hand, it's beneficial to have an insurance broker manage your policy. They will ensure that the insurance company doesn't increase your premium by an unnecessarily large amount. Insurance companies often state that indexation is tied to inflation published by the Czech Statistical Office, as well as the index for construction work price growth. However, several such figures can be found at different times of the year, and as a layperson, it's difficult to decide which one to follow. Moreover, insurance companies themselves often obscure or vaguely explain the extent of price increases. So, be sure that you're not paying, for example, 30% more instead of the necessary 10% price increase. Let your broker handle the indexation in your favor. This will save you significant financial resources. Our 28 years of experience are at your disposal.
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