If you underestimate the value of possessions stored away in your attic or under stairs, you could leave your home dangerously uninsured.
Between us, Brits own forgotten or unused items worth billions of pounds, according to estimates from auction website eBay.
But failing to recognise the value of these possessions can cause problems when it comes to getting the right amount of home contents cover.
Get the right cover
When you sign up for a contents policy, you will usually be asked to give a level of cover that you want insured. The higher the value of your possessions, the more your premiums will cost.
When deciding on cover levels, a lot of people simply think about the value of items that could be taken in a break-in.
While burglary is probably the most common cause of home insurance claims, there are other situations you need to take into account: for example, a fire or serious flood could in theory destroy the entire contents of your home. This means you need to be covered for the whole amount.
Consequences of underinsurance
The risk of fire or flood is not the only reason you should insure the full value of your possessions. Providers are within their rights to cut any claim payouts in direct proportion to how much a customer is underinsured.
For example, if you say the contents of your home are worth £10,000 when they should in fact be valued at £20,000, your insurer could legitimately pay out just 50 per cent of any claim you make.
You may think this sort of underestimate may be hard for a provider to uncover, but if your home was hit by fire, for example, the insurance company’s loss adjuster may be able to show you lacked full cover.
Valuable items
If you have something particularly valuable stashed away in the attic – perhaps something that has increased in worth over the years such as an antique or piece of jewellery – make sure they are insured separately.
Most policies give an upper single-item limit – which could be £1,000 or £1,500. Anything worth more needs to be insured separately on the policy, at extra cost. If you fail to mention a high-value item when you apply for cover, it will simply not be insured.
Bear in mind you can add valuable items, such as engagement rings or a new TV, to your policy as you acquire them – this is a better idea than waiting for your next renewal.
The most unexpected items could turn out to be worth far more than you think – so consider looking through your forgotten possessions to see if there is anything you should have valued. And remember, auction and second-hand websites can often give you a rough idea of how much something should be insured for.
