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Beware the underinsurance trap

Beware the underinsurance trap

Category: Home insurance

Updated: 27/11/2012
First Published: 17/01/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Britons have been warned that they are risking their prized possessions by undervaluing their home contents.

Research by Direct Line found that a quarter of households have undervalued their home contents by a staggering average of £20,000.

It means that around 6.8 million UK homes are underinsured, with some £138.5 billion worth of personal possessions at risk if something such as damage or theft were to happen.

In addition, another 5.2 million homes are completely uninsured, leaving an average of £14,000 – or £74 billion in total – worth of contents at risk.

Taking both uninsured and under insured households together, an estimated £212.9 billion of possessions are being put in jeopardy.

On average, people own £4,000 worth of furniture, almost £2,000 worth of clothes, and electricals with a value of £3,000.

"There is no doubt that recession-hit Brits have a lot on their minds at the moment - but the importance of home contents insurance shouldn't be underestimated," said Andrew Morrell, head of home insurance at Direct Line.

"No-one wants to think about the prospect of losing all their possessions.

"Unfortunately it is far too easy to turn a blind eye to the true value of your home's contents and grossly underestimate the level at which your insurance should be set - thereby putting your belongings at risk."

It is recommended that people regularly go over their insurance documents to check that their cover is adequate.

Check, for example, the single article limit offered by insurers, as you may well have valuable items such as artwork or jewellery that exceed the limit, and would need to be covered separately.

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