This news from Confused.com does highlight the lack of consumer interest in Contents insurance. Often if you are “working poor” it’s difficult to find the cash for Contents cover premiums and frankly, private health for you and your family might be a more pressing issue, depending on your access to local NHS services. What is certain is that the old model of Contents cover by room, or a fixed value payout, isn’t really fit for service in the 21st century.
People often want very specific items to be replaced with new for old, with laptops, work related tools or fitness equipment, 2K bicycles, e-scooters or designer clothing/accessories being rated as far more important than a sofa, curtains or cheap air fryers. Capping bicycle insurance values at £1000 is probably counter-productive when it comes to selling policies to many flat-dwellers in major cities for example – the product T&Cs simply do not match the actual lifestyle.
The challenge for Contents insurers lies in developing AI that can accurately value a Nike trainer collection, an Insta360 media kit and a couple of Fendi bags, not a typical battered living room three piece suite. Here’s the word;
The latest findings from the experts at Confused.com home insurance reveal that millions of households in the UK could be at risk of being underinsured. This means households might have to pay to replace or repair their belongings and valuables if something happens to them.
Unlike some insurances, it’s not a legal requirement to insure contents. With rising household costs, it might be tempting to underestimate the value of your belongings for a lower insurance price, or skip home insurance altogether. A survey of more than 2,000 UK adults reveals that a third (34%) do not currently have a contents insurance policy in place.
But for those with insurance, 2 in 3 (65%) haven’t conducted a valuation or contents inventory to accurately value all their possessions. This is the equivalent of up to 11.7 million UK households possibly being at risk of not having the right cover for their contents. That’s on top of 9.6 million households without any contents insurance at all. It’s important to be accurate when you value your belongings for your contents insurance policy. You should include everything in the home that isn’t part of the building structure.
Your contents insurance isn’t just for expensive electronics or large pieces of furniture.You should also include soft furnishings, clothes, children’s toys and more. If you’d pack it up when moving house, it should be included in your contents policy.
The average contents value for UK households is £50,000[2]. So an underestimate on a contents insurance policy could leave Brits significantly out of pocket if they need to make a claim. Meanwhile, overestimating could mean paying more for cover that isn’t needed.
On average, Brits review their policy valuation every 2 years, however almost a fifth of people (17%) have never updated this valuation. When asked, 1 in 6 (16%) Brits with contents insurance didn’t feel confident that their estimated valuation was accurate to the actual value of their belongings.
Heightened risk for renters
There is a stark contrast in contents coverage between owners and people living in private rentals. Almost 9 in 10 Brits who own their homes outright (87%) or have mortgages (88%) currently have contents insurance. That’s compared to just 2 in 5 private renters (40%) who have contents insurance. Renters are likely to move more often than homeowners. So they might be less likely to buy a 12 month insurance policy that exceeds their tenancy length[3].
This difference extends to policyholders too. Two in 5 outright homeowners (38%) and mortgagers (41%) have done a detailed home inventory or taken note of their contents value. In the private rented sector, just 35% of tenants have done this. In social housing, only a quarter (25%) have done so. One in 10 private renters (11%) said that they have never updated their valuation.That’s compared to 7% of outright owners and 3% of mortgagers who don’t revise this estimate over time.
Younger people are less confident in their coverage
Adults over the age of 55 are more likely to have never updated their contents valuation. Around 19% of respondents in this age bracket have never done this. Younger people are much more likely to update this information.Only 1 in 11 (9%) adults aged 18-24 said they don’t update this valuation over time.
Despite younger people being more likely to update their valuation, they’re actually less confident in its accuracy. Almost 3 quarters of people over the age of 55 felt confident that their current contents insurance coverage accurately reflects the value of their belongings. Just under 3 in 5 (58%) people aged 18-24 said the same.
And only half (50%) of the people who have never updated their contents’ valuation felt confident that their insurance policy was accurate. They were aware of possible underinsurance too.
Matthew Harwood, home & lifestyle expert at Confused.com home insurance, says: “.
“The average value of contents in the UK is £50,000. So undervaluing your belongings could risk a significant shortfall which you may not be able to claim on your insurance for. Using a contents insurance calculator can help you itemise your belongings to work out the total cost to replace your possessions.”
Confused.com shares tips on how to get cheaper contents insurance:
-
Insure contents for the right amount: Undervaluing your contents could mean you have to pay replacement costs if you need to make a claim. Overvaluing could see you paying for more cover than you need.
-
Choose to pay a voluntary excess: The amount you agree to pay towards the cost of a claim can affect the overall cost of your policy. Confused.com users who added a £250 voluntary excess to their policy paid 23% less[4] for their contents insurance. That’s compared to those who chose to add no excess at all. Just make sure this is an excess you can afford to pay, in addition to any compulsory excess set by your insurance provider.
-
Pay annually instead of monthly: If you can afford to, paying for insurance annually instead of monthly could save up to 18%[5] on the cost of a contents insurance policy.
-
Upgrade your home security: Improved security reduces the risk of being burgled, which could lower your risk profile for insurers. Burglar alarms, secure locks, and CCTV cameras can all improve your home security. If you’re renting, you may need your landlord’s permission to make these changes.
-
Consider whether you need optional extras: Additional features such as accidental damage insurance or cover for your possessions while away from home can be helpful. But if lowering your costs is more important than having these extras, you could consider removing them.
Be the first to comment