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Why you should care about underinsuring your home

The average UK home contains £55,000 worth of belongings, yet on average we’re only insuring them for £35,000. That’s a huge £20,000 difference – and it’s an amount that could cause all sorts of problems if you need to make a claim.

When you get your home contents insured, you need to estimate how much it would cost to replace everything in there, even if the chances of everything being damaged or stolen at the same time are slim – a fire or flood the only realistic events that could cause wholesale loss of your items.

The reason – when you claim insurers often calculate the payout based on the proportion of your cover. So if you are insured for £25,000 but have £50,000 worth of belongings, you’ll probably only get 50% of your claim.

Why are people underinsuring?

Part of the problem could be people don’t realise just how much everything costs. Fifty-five thousand pounds worth of stuff in your home might seem a huge amount, but you need to take into account everything – from clothes to bed linen to books – not just the obvious high-value items.

You’ll also need to cover belongings held in gardens, sheds and garages in the total value.

Alternatively, people might be trying to bring down the price they pay for the insurance – but doing so means they could end up not fully insured.

Insurance extras you might be forgetting

It’s not just the total level of insurance you need to make sure is right – you might not be getting the full cover you need in other ways.

High-value items

You’ll often be asked to specify either very expensive or high-risk belongings on your policy in addition to the general cover. Miss them off and you won’t be able to claim for them.

Comparison site MoneySuperMarket - who calculated the £20,000 figure after analysing 2.6 million insurance quotes from the last 12 months - found the most commonly itemised belonging was a laptop, followed by bikes, jewellery and watches.

Items outside the home

Some things – like phones, cameras, watches and glasses aren’t covered if you are outside your home unless you pay for additional cover.

Accidental damage

Spill a drink over your computer and you might have your claim rejected if you haven’t paid for accidental damage. Again it costs more, but it could be worth considering.

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