The middle class property threat
So why don't people have the right insurance, and what are the risks?
Why?The latest data comes from Wesleyan's Private Clients insurance service, which says there are a number of reasons for under-insurance. When it comes to buildings, the most common is failing to account for home improvements. This can be anything from a full-on extension to a new bathroom. They all add to the value of the building and fixtures and fittings, so all need to be included in calculations for buildings cover.
In terms of contents, there are three different traps: First, people forget about some of their belongings when they are first setting up a policy. Common incidents of extreme forgetfulness include home office equipment and things in outbuildings and sheds.
Second, people underestimate the value of things. Prime culprits are undervaluing technology, art, antiques and jewellery collections.
Third, they often forget to add major acquisitions to their policy during the period it runs for. This may be things they have bought, or those they inherited or were given: all must be accounted for.
The dangerThe risk is that under-insurance could mean your insurer refuses to pay out. Tim Moseley, Head of General Insurance at Wesleyan said: "For those under-insured, any claim could be subject to an average clause that could significantly reduce any pay out they receive. In a worst case scenario, the cover could be withdrawn completely and declared void. Unfortunately, the first time people might discover there is a problem is when they need to make a claim."
At the other end of the spectrum, the insurer also found people taking a very different risk: over-estimating the value of their building and contents by as much as 20%.
The solutionThe answer, they suggest, is to have one of their appraisers pop round to calculate the cover you need. However, you can do this yourself if you set aside a little time - which will keep you safe from the first two risks.
It's worth actually getting up and walking round the house, estimating the value of furniture, all electrical equipment, white goods, paintings, ornaments, antiques, kitchen gadgets and china, decorations, bikes, jewellery, clothes, books, CDs and DVDs. It can be tricky to consider the value of something - so if you have any receipts it can prove invaluable - otherwise you'll need to search online.
Then you can input this into an online calculator. They will usually calculate the total value of contents, the value of the high risk items and the value of the most expensive high risk items. You can then use this to search for the best cover for your needs.
Avoiding the third risk means bearing insurance in mind all the time. Any time you buy anything valuable, take some time out from admiring your shiny acquisition, and make sure you have added it to your insurance policy as soon as possible.