Cash-strapped householders are under-insured by billions because they are either too lazy to protect their possessions or can’t afford to pay the full cost of home insurance.
Up to 6.8 million homes are underinsured and another 5.2 million have no home insurance, leaving a total of about £200 billion of belongings at risk, claims a new survey ‘The Hidden value of British Homes’.
The report reveals that an average one in four households is underinsured by £20,000 and another one in five have no home contents cover at all for their average £14,000 of possessions.
About four out of 10 households (39%) fail to adjust their home insurance to take account of valuable gifts or inheritances, says the report.
Underestimating the value of belongings is a major problem for many households because no one sits down and works out the value of their possessions.
Cheap home insurance is combined buildings and contents cover
According to the survey, the average home has:
- £4,000 of furniture
- £5,000 of electrical goods
- £2,000 in clothes
- £1,800 jewellery
- £2,700 carpets and rugs curtains and blinds
- £1,200 garden and garage items
“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, who carried out the survey.
“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.”
The average cost of home insurance is about £300, but varies depending on your home, personal belongings and postcode.
Many homeowners with mortgages must have buildings cover as a condition of the loan.
Often, the cheapest home insurance is a combined buildings and contents policy.