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Is your home at risk from under-insurance?
In 2008 AXA estimated that under-insurance could total more than £255 billion.
The problem is particularly prevalent in the high-net-worth sector. Zurich found that 10% of second homes do not have contents cover and 11% of homeowners do not know if their insurance is adequate.
The slump in the property market has resulted in people choosing to upgrade their current homes or invest in wine, art and jewellery, rather than moving house or buying property. However, as collections grow, sums insured are often not reviewed as a result.
Over 50’s insurer, RIAS, claimed that there are 112 million items of gold across Britain, yet 61% of those that own gold have never had it valued. As factors affecting the value change over time (the price of gold rose by 25% last year) professional valuations should be sought at regular intervals to ensure the right level of protection is in place.
Even the contents of your wardrobe can be vastly underestimated. Hiscox’s fashionable finances study found that 69% of adults have no idea how much the contents of their wardrobe is worth. Hiscox reported that one of their customers valued their clothes at £3,000 when they were, in fact, worth £25,000.*
The ABI provides a guide for calculating sums insured on their web site, they advise consumers to include the following in their contents sum insured:
• Floor coverings – carpets, rugs, etc
• Furniture – tables, chairs
• Soft furnishings – curtains and their fittings, cushions, etc
• Electronics – TVs, PCs, DVD players, satellite receivers, telephones, music systems
• Appliances – cooker, fridge, washing machine, microwave, hoover, heaters
• Eating and drinking – utensils, cutlery, china, glass, food, drink
• Valuables – gold and silver, other jewellery, furs, pictures, clocks, watches, cameras, ornaments, collections
• Sport and leisure – sports equipment, books, bikes, DVDs, toys, musical instruments
• Garden and DIY – lawn furniture, mowers, ladders, tools, paint, fuel, etc
• Linen – tablecloths, towels, bedding
• Clothes – shoes, coats, bags, suits, etc
Jill Kerrigan, Client Relationship Manager, explains the approach at Perkins Slade,
‘We usually visit clients at home to assist them in calculating the sum to be insured on general contents. For specialist possessions, including fine art, antiques and jewellery, we would recommend professional valuations.'
Next Steps
To discuss the issues raised in this article or for further information, please speak to your usual Perkins Slade contact. Alternatively you can call 0121 698 8000 and ask to speak to a member of our Private Clients team or email privateclients@perkins-slade.com
Notes
*Most standard household policies settle claims on clothes after deducting a sum for wear and tear. However, most of the specialist high value home insurers offer new for old cover and the sum insured should therefore reflect the replacement cost as new.
