Now that Christmas is over, so is the Christmas bonus that many home insurance companies provided. Householders must make sure they are not now under-insured.
Home insurance companies automatically raise the level of cover, by about 10 per cent, over Christmas, taking into account the amount of presents and festive foods that people stock up on.
However this extended cover doesn’t carry all the way through the year and will expire.
Vicky Emmott, senior underwriter at Halifax Home Insurance said, “Householders should check their insurance policy documents to ensure they are not underinsured following Christmas.
“Although some insurers will increase contents cover over Christmas, this still leaves the problem of re-evaluating your contents in the New Year.”
Being under-insured can cause problems later, regardless of the value of the claim.
This is based on a system the industry uses is called averaging. Insurance providers decide that if all your contents are not covered adequately, none of your possessions are covered.
Richard Mason, director of Insuresupermarket.com said, “If you have £45,000 worth of contents but are only insured for £30,000, your insurer may consider you to be 50 per cent underinsured and therefore will only pay half of any subsequent claim, even if it is less than the £30,000 sum insured.”
To illustrate the point, a £600 claim for freezer food spoilt through the door being left open may only receive a £300 payout.
Ms Emmott concluded, “It’s vital for people without unlimited cover to remember to update their insurer with any changes to their contents value and be aware that some insurers … will penalise customers who underestimate the value of their belongings.”