Why is it important to update insured amounts in 2025?
The year 2025 brings new challenges in the insurance sector. Rising prices of real estate, building materials, and services have led to many insurance policies no longer reflecting real values. If you do not update your insured sums, you risk underinsurance and financial losses in the event of an insured event.
What is underinsurance and why is it a problem?
Underinsurance occurs when the value of the insured property is higher than the agreed insured sum. For example, if you have a property worth 5 million Czech crowns, but the insured sum is only 3 million, the insurance company will pay you a corresponding proportion in the event of damage. This means that even for minor damage, you will only receive a portion of the necessary compensation.
For example:
- Property: Value 5,000,000 CZK
- Insured sum: 3,000,000 CZK
- Damage: 1,000,000 CZK
- Payout from insurance company: 600,000 CZK (corresponds to a ratio of 3:5)
What factors increase property value?
- Inflation: In 2025, a continued rise in price levels is expected. This affects not only the value of real estate but also the costs of renovations and repairs.
- Rising building material costs: The prices of wood, steel, concrete, and other materials have significantly increased in recent years.
- Rising service costs: Hourly rates for craftsmen, technicians, and other specialists are higher, making repairs and construction more expensive.
- Technological equipment: Home modernization, such as the installation of smart technologies, increases the overall value of insured property.
How to proceed with updating insured sums?
- Check the current value of your property: Review the current value of your real estate or equipment. A professional appraisal can help you with this.
- Consult your insurance manager: Most insurance companies offer the option to update insured sums based on inflation estimates or market changes.
- Add a buffer: Consider a small buffer above the estimated value to prevent issues with future price increases.
Real-world example
In 2018, Mr. Novák insured his family home for CZK 4,000,000. Today, however, its value has reached CZK 6,000,000. If a fire occurred and caused damage amounting to CZK 3,000,000, the insurance company would only pay him CZK 2,000,000 based on the current insured amount. He would therefore receive CZK 1,000,000 less. By updating the insured amount to the current value, he would avoid underinsurance and protect his property.
Final advice
In 2025, it is more important than ever to regularly review your insurance policies. Contact your insurance advisor, have them prepare an up-to-date overview, and adjust the insured amounts if necessary. This will ensure that in the event of an insured event, you receive adequate compensation and avoid financial complications. Eurovalley – the best insurance solution or nothing!
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