Safeguard your possessions
FROM “an Englishman’s home is his castle” to “keeping up with the Joneses”, there are plenty of old adages evoking Britons’ love for their houses and their possessions. Combine this with our customary practice of preparing for the worst and you might think that we would be rather conscientious about insuring our homes and their contents.
Not so, according to a recent study conducted by online comparison website Moneysupermarket.com. In fact, it reckons that nearly 1.5m homeowners are putting their properties at risk with inadequate cover and 250,000 have no cover at all for their homes. The survey also shows that London and the South East are the least protected areas.
Julie Owens, head of home insurance at moneysupermarket.com says that not having any cover at all is taking a huge unnecessary risk – problems such as subsidence, burst pipes, personal liability and even boiler breakdown in some cases could land you with a bill well into the thousands of pounds, she warns.
Most mortgage providers require you to take out buildings insurance as a condition of your loan but there is no legal requirement to take out contents insurance. The vast majority of people – 80 per cent – who buy insurance take out a combined buildings and contents policy, says Darren Black, head of home insurance at Confused.com. In the event of a burst pipe, which would require claims on both buildings and contents policies, it is vastly easier to deal with just one insurer.
But how much should you insure your home and its contents for? Most buildings insurance policies ask you to estimate the cost of rebuilding your home – a question which baffles most. Confused.com estimates that 90 per cent of people put in the market value of their homes, usually a gross overestimate. On its website, there is a calculator which can help you value the rebuild costs more accurately.
In contrast, most people really underestimate how much their contents are worth. Black says that about 60 per cent of people will value their possessions at around £20,000-£25,000. In reality, the average house has around £50,000 worth of contents, of which £8,000 is stored in the wardrobe alone. Contrary to popular opinion, most claims are because of flooding or water leakages rather than theft. This can damage hardwood floors, soft furnishings and possessions, which would be included in your contents insurance.
If you have a number of expensive high risk items – ie, those that an insurer deems likely to either get broken or stolen – you must make sure you list all your high-risk items such as an entertainment system when you apply for the policy. For example, men’s watches are rarely listed but can be very expensive.
It is also worth asking prospective insurance providers about individual single item limits. This can vary, says Black who notes that Hiscox is the premium provider: “It has an excellent claims experience and customer account management but it would be one of the more expensive providers out there.” Other well-regarded insurance providers include Lloyds TSB and Saga (which does quote for everybody, not just for retirees).
If the worst does happen, having insurance provides at least some comfort.