Why is index linking so important?

Keep reading if you have a business or home insurance.

The cost of living has been growing since the beginning of 2021 and according to the office for national statistics, the annual inflation rate rose to 11.1% in October 2022. Inflation is now at a forty-one-year high which has subsequently led to increased costs of services and goods for households and businesses.

It’s important to keep your property insurance as up-to-date as possible and through the application of index linking your Insurer helps to adjust the value of your insurance policy to reflect changes in the cost of living, such as inflation or deflation.

What is index-linking?

Index-linking is a percentage uplift to adjust the insured value of your property in line with inflation, deflation, and the cost of living. This protects you against the risk of underinsurance. When your policy renews, index linking automatically updates the sums insured (usually by increasing them) in response to economic changes.

What does this mean for your policy?

Most of our policies, including home and business insurance, are automatically index-linked. This means that they adapt to growing costs and provide ongoing protection against inflation. However, it’s important to note that index linking may also mean that you are underinsured.


What are Insurers doing about inflation?

Most insurers are increasing the amount of index-linking applied to your policy and how often they review it to ensure that you are protected against inflation.

Please consider if the amount of index-linking applied by your insurer is enough for your needs. Keep in mind that these increases apply to the figures you have provided, so if you haven’t reviewed these amounts recently, we recommend doing so now.

What can you do?

As an insurance broker, we can’t tell you what your sums insured should be, but we can point you in the right direction to get the guidance you need. Have a look at our articles on how much business and home insurance is enough to help you determine the right amount of coverage for your needs.

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Need help? Get in touch!

Our friendly team is ready to help with any questions or support you need. You can contact us at any of our local offices:

Alderney Office
Open: Monday - Friday 08:30-16:30 T: (01481) 824 100
Guernsey Office
Open: Monday - Friday 09:00-17:00 T: (01481) 710 731
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Open: Monday - Friday 09:00-17:00 T: (01534) 835 383

Our expert advisors are here during office hours to chat about what you need and find the best solutions for you. If it's outside these hours, just leave us a message. We'll get back to you as soon as we can.

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