23rd November 2015
Reviewing home insurance may not be at the top of everyone’s must-do list but those who avoid doing so could be at risk of their contents being under-insured, Saga Home Insurance has warned.
During the winter the average cost of a home contents claim rises by almost £400 and claims for escape of water, often caused by freezing pipes, increase by 45%.
As such Saga is urging people to take stock of their cover levels before it’s too late.
While the Association of British Insurers estimates the average contents value in a three-bedroom home as £55,000, Saga’s research showed that many people do not understand their home insurance policy and as a result may find that their possessions are not fully insured.
People aged 50 and over may be particularly at risk as they are more likely to have accumulated valuable items throughout their lifetime, either through increased spending power, or through inheritances.
The analysis from Saga found that some 17% of people take a very cavalier approach to their belongings and opt not to buy home insurance at all.
However even those that do take out a policy do not research what they are covered for. A third of people with insurance do not know their total level of contents cover, so are completely unaware whether their policy covers their belongings.
This issue is compounded by the fact that many people don’t accurately calculate the value of the items in their home when taking out insurance.
One in three people, at 36%, admitted to not doing it thoroughly, which could lead to undervaluation.
Traditionally the amount of cover an insurer offers for valuables in the home would depend on the number of bedrooms in the property.
So if you have more rooms you have more cover. However nowadays a two-bedroom home is just as likely to have the same number of valuables in it as a four bedroom property so more insurers are now offering policies which allow customers to choose a set level of cover that meets their needs.
All insurance policies have a ‘single item limit’, and this simply means the highest amount you can claim for any one item. Some might be for £1,000, while others, such as from Saga could be as much as £2,500.
However 39% of people don’t know what their limit is, meaning that many high value items might not be covered. Possible items that might be over the limit include jewellery, watches, artwork, antiques and designer handbags.
Much like with stocks and shares, the value of some items such as gold and other precious metals or arts and antiques fluctuate over time. It’s a good idea to have these valued regularly so you can make sure they are still covered by the single item limit on your home insurance policy.
Another misconception when it comes to home insurance is that most people believe items such as tablet computers, cameras and jewellery should be covered by their policy when they are out and about, but this often is not the case. Those who want their valuables covered when they’re outside the home should consider a personal belongings add-on.
Many people taking out insurance seem to choose to ‘get and forget’ and do not review their policy each year. Policies should be reviewed each year to ensure the cover is still sufficient, particularly if you have bought new furniture or electronic equipment, have inherited items or had valuable gifts for Christmas or birthdays. One in five people, at 18% said they have not reviewed their policy in the last two years.
Sue Green, head of home insurance, Saga said: “Our research has highlighted that there is a real lack of understanding about home insurance. People could be underinsured for years and only realise when it’s too late.
“The key is to look at the contents cover you have in place and to assess whether it meets your needs and your situation. Doing so is a simple and effective way of making sure you can claim for any damaged of lost items that your policy covers, giving you peace of mind.”