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Don't underestimate the value of your belongings

Many UK households are leaving themselves open to the risk of being underinsured

When it’s time to renew your home insurance policy, more often than not customers will be influenced by price and convenience without considering the quality of cover on offer. However by thinking of insurance this way, many households are vulnerable to the risk of being underinsured. And unfortunately, most won’t realise it until they come to make a claim.

What is underinsurance?

Put simply, underinsured means the ‘sum insured’ is less than the cost of rebuilding, replacing or repairing. For example, if there's a fire at your home, your policy won’t pay out the full value of the items damaged. Or you yourself may have to make up a shortfall in rebuilding costs.

Know what you own

Underinsurance occurs when the policy holder either undervalues their possessions or assumes their policy’s blanket cover is adequate. The obvious, but not always so easy way to avoid it, is to take account of the true value of everything you own – both buildings and contents. 

If you’re unsure of the difference between the two, imagine your house can be lifted off the ground and tipped upside down. Everything that falls out is contents. The rest should be covered by buildings insurance. 

What does contents insurance cover?

As well as the objects that immediately spring to mind such as furniture, electronic equipment, and expensive items such as jewellery, your home’s contents also includes things like clothes, art and any items you keep in your outbuildings – such as gym equipment, garden furniture or workshop tools. 

All of these are items people tend to accumulate more of over time. And over time, particularly in the case of objects such as antique jewellery or an art collection, their value may have risen much more quickly than you realise. They could be worth considerably more today than they were when you originally insured them, and that should be reflected in your insurance cover.

What's included under buildings insurance?

While contents insurance takes care of replacing your possessions, buildings insurance should cover the true cost of rebuilding your property and outbuildings. However, that’s not the same thing as the market value. Rebuilding costs involve clearing the site, legal fees, engaging architects and more. If your home isn’t of standard construction, is listed, or is located in a conservation area, then restrictions on the materials that can be used will also have an impact on the cost of rebuilding or repair. 

New acquisitions should be considered here too. If you’ve recently renovated a bathroom, fitted a new kitchen, or developed any outbuildings, you’ll almost certainly have increased the rebuilding costs of your property. 

Check your policy

Once you have a better idea of the value of your property and everything in it, check your policy to make sure you’re adequately covered. Some insurance policies set limits for valuable and single items such as jewellery. Others may refuse to pay out at all if a building has been valued or described incorrectly.

Regularly review your policy

The best way to make sure you don’t fall foul of underinsurance is to review your cover regularly, either when it’s due for renewal, or following a big purchase. Insurance may not be the first thing on your mind after receiving a special birthday or Christmas gift, but it’s worth checking.

It’s always best to talk to an expert when valuing your home and contents. Buying cheap insurance online may be quick and convenient but it could end up costing you much more than you expect if you ever come to need it. We have over 300 local offices to ensure you receive a personal service that understands your specific needs. 

We offer two Home Insurance products and apply meticulous attention to detail when protecting your home, ensuring that if you do ever need to make a claim, your building and contents are suitably insured to their correct value.