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Avoid getting caught short on home contents insurance

a row of suburban homes in londonWith household budgets still stretched to their limits, it may be tempting to cut back on your home and contents insurance, but this is false economy, as you are putting your possessions at risk.

Contents insurance protects your belongings from damage or theft, and includes carpets, household goods, televisions, cookware, computers, clothes, and any personal items and valuables.

Yet one in five households (5.2 million homes) have no cover for home contents – leaving £14,000 of goods per household unprotected – totaling £74 million, according to new research. *

Even if you do have a policy, you could still be underinsured.

Don’t risk being underinsured

You may think you have a good idea of the value of your belongings, but many people do not realise just how much their possessions are actually worth – and don’t buy enough cover.

Findings show a quarter of people (6.8 million households) who have home insurance are underinsured by a huge £20,000 – with £138.5 billion at risk in total.*

The issue is, if you are underinsured, in the event of a disaster, your insurer will scale down any claim.

For example, if you have £45,000 worth of contents in your home, but are only insured for £30,000, your insurer might only pay two thirds of a claim – even if it is for less than £30,000.

Carry out an inventory

One of the best ways to avoid falling into this trap is by carrying out a regular inventory of your home contents on a room-by-room basis.

Given that most policies offer “new for old” replacement cover, the key is to calculate the value as if you were replacing the goods as new.

Spend time totting up the cost to ensure everything is covered, and don’t forget that with computers or mobile phones, the cover should also include any downloaded images, graphics, music and apps.

One simple way to avoid underinsurance is by opting for a blanket policy with unlimited contents cover, or a “bedroom-rated policy” which gives a set amount of contents cover based on the number of bedrooms.

High value items

If you have expensive items such as watches or jewellery, you may need to register these individually with your insurer as “high value items.”

But note that insurers often impose limits of £1,000 or £2,000 for single expensive items – so check for any caps.

Also make sure you include cover for items you carry away with you from the home.

Review your cover

At this time of year, it’s more important than ever to review your contents insurance, as you need to ensure that any gadgets you received for Christmas – or bought in the January sales – are covered.

Cutting the cost of cover

In most cases, applying for home insurance is a tick-box exercise, and while you may provide a wide range of details, it is your postcode which is likely to play the biggest role in determining the premium.

That said, there are some simple steps can you take to reduce costs, such as buying your buildings and contents cover from the same provider, building up a no-claims history, and improving security, such as fitting a burglar alarm, adding window locks, or joining a Neighbourhood Watch Scheme.

You can also potentially lower your premium by agreeing to a bigger excess, and by paying your premium in one go upfront.

Shop around

When choosing a policy, don’t base your decision on price alone – you need to make sure the level of cover is right for you.

Shop around using a comparison site, read the small print, and check the products’ features to make sure the policy meets your needs. 

*Direct Line


Esther Shaw

Esther Shaw

Esther Shaw is a regular contributor to and is the former deputy money editor at The Independent and Independent on Sunday. Before that, she worked as a money and City reporter on The Daily Express and Sunday Express.
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