Underinsured homes: 1 in 4 households don’t cover their contents

More than a quarter of households in the UK don’t insure their home contents, leaving more than £266bn of possessions unprotected.

Research from the Association of British Insurers (ABI)[1] shows that 7.5 million homes don’t have home contents insurance, meaning that in the event of theft, fire, flood or other damage, they wouldn’t get anything paid out to replace what they had lost.

On average the contents of a UK home are worth £35,000, more than the UK average annual salary[1]. The average cost of combined home and contents insurance is £307 a year, accordingly to comparison site finder.com[2], while home contents insurance alone costs on average £141 a year[3].

A YouGov study found that only 4 out of 10 people who rent their home had any form of contents insurance[4], but 93% of people who own their own homes have policies in place to protect their possessions.

Home contents insurance is often a requirement of obtaining a mortgage, whereas this tends not to be the case with rented properties. There is concern that some renters might think that their landlord’s buildings insurance also covers their contents, which is not usually the case.

The Financial Ombudsman has reported on some of the challenges faced by customers and insurers when it comes to making sure that the home contents insurance people do have, is sufficient to cover the actual value of their possessions. Customers need to make sure they include everything when calculating the value they need covered, and check what each policy option covers and what is excluded.

Choosing your home cover - avoiding underinsurance

Choosing your home cover – avoiding underinsurance

  • Work out how much cover you need, based on the cost of replacing all your possessions. Don’t forget to include things like soft furnishings and garage or shed contents.
  • Check if the policy you’re considering includes new for old cover, which will replace items with new, or if they only cover the amount those items are worth at the time they’re lost or damaged.
  • Check if there are upper limits for single items; if you think you need a higher limit, see if the provider can offer you more options
  • Remember to add new high value possessions to your insurance when you buy them
  • When your policy is due for renewal, make sure you check whether the value of your possessions has changed
  • If you’re a tenant, check whether you’re liable for replacing any items belonging to your landlord if they get lost or damaged, as you might need to insure these too.

[1] Association of British Insurers, reported in The Journal, Chartered Insurance Institute, June-July 2019

[2] finder.com

[3] ABI, reported in The Independent, February 2018

[4] YouGov Home Protection Study, 2014

[1] Association of British Insurers, reported in The Journal, Chartered Insurance Institute, June-July 2019

NEED A HOME INSURANCE QUOTE?

MORE ARTICLES

The good old American Muscle car

August 4th, 2015

The American Muscle Car has always been the pride of the United States. With it’s no-nonsense straight line speed and aggressive looks, the concept was said to have originated back in prohibition time with the Bootleggers need for speed abling them to outrun the law.

VIEW MORE

Driving your Classic Car to work 2015

July 14th, 2015

The daily commute to work, not the most enjoyable task of the day! Even for a car enthusiast. Have you ever thought of driving your classic car to work instead. Well it seems some insurers are promoting this very thing, is it a good idea…they say it could save you money? Here at Heritage Classic Car Insurance we decided to look at the facts.

VIEW MORE

Classic Car Jargon Buster

September 8th, 2016

Car lovers the world over know there’s a whole language to learn when it comes to motoring. This is more so the case for classic car enthusiasts, who have to take it even further to account for generations’ worth of lingo and classic terminology.

VIEW MORE