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Households risk billions in the underinsurance trap

16th January 2011

  • Over £200 billion of home contents at risk
  • 6.8 million households are underinsured
  • 5.2 million homes have no contents insurance

Householders are risking their possessions by undervaluing their home contents, according to new report from Direct Line. The research into ‘The Hidden Value of British Homes’ has revealed a vast number are completely uninsured1.

The insurance gap laid bare…

The report reveals £212.9 billion worth of possessions in UK homes are at risk2. On average, a quarter (26 per cent) of people with contents cover are underinsured, by a staggering £20,000 – with £138.5 billion at risk in total3.

In addition one in five (20 per cent) have no insurance for home contents, leaving an average £14,000, or £74 billion, of possessions completely at risk4.

Andrew Morrell, head of home insurance at Direct Line, said: “There is no doubt that recession-hit Brits have a lot on their minds at the moment – but the importance of home contents insurance shouldn’t be underestimated. No-one wants to think about the prospect of losing all their possessions. Unfortunately it is far too easy to turn a blind eye to the true value of your home’s contents and grossly underestimate the level at which your insurance should be set – thereby putting your belongings at risk.”

On average, Brits own:

  • £4,000 furniture
  • £3,000 electricals and £2,000 white goods
  • Almost £2,000 clothes
  • £1,800 jewellery
  • £1,700 carpets and rugs, and almost £1,000 of curtains and blinds
  • £1,200 garden and garage items


Heirloom headache

‘The Hidden Value of British Homes’ report also found that among those with contents insurance, 39 per cent had not adjusted the value to account for inherited heirlooms such as jewellery, furniture and antiques. Others did not realise that the amount of contents cover on their home insurance would need to be adjusted or simply admitted they had not got around to it (four per cent each).

Kris Coombes, valuer, Direct Line, said: “It is worrying to see the level of underinsurance in British homes. People are putting treasured possessions at risk. Day to day items, furniture and clothes can really add up, let alone an expensive watch. In addition, items households may have invested in, or inherited heirlooms can push the contents limit over the amount covered for on their policy. Householders should think about the replacement value of their home’s contents, room by room and item by item, the total will really mount up – and it might be a shock to realise how underinsured homes are.”

Direct Line’s top tips for ensuring all home contents are covered:

  • Do not be tempted to underinsure. Even if the policyholder thinks they do not own items that thieves would want to steal. Insurance covers a number of other perils including flooding and fire which is why it important to include all items
  • Check how an insurer defines contents and buildings. Items such as carpets and contents in the garden may also be included under the policy contents. Do not forget items that are not used every day but are still valuable, i.e. family jewellery
  • Use a contents calculator to establish the value of your contents in each room including applicable furniture.
  • Check the single article limit offered by the insurer, as some items may be higher than this and need specifying separately. This may not be jewellery, so think about other items (e.g. paintings).
  • Even with a blanket policy, like the £50,000 offered by Direct Line, do not assume this will be enough. It is still worth checking
  • Each year the value of your contents will change, so make sure cover remains adequate. Remember that contents sum insured should reflect the replacement cost of items at today's prices - not the amount paid for them.
  • Do not forget to include items such as kitchen utensils, bathroom towels, bed linen and even those items stored in the loft - the cost of replacing these items can all add up


Notes to Editors:

1 Research undertaken by Opinium Research based on an online poll of 2,002 British adults between 2nd and 6th December 2010. Results have been weighted to nationally representative criteria.

There are currently 26.20 million households (ONS).

Of 2,002 adults surveyed, 76% say they have contents insurance and 20% say they have no cover.

Among those who have insurance and know what approximate level they have, the average estimated value of cover is £47,660.

2 Total value of contents at risk: £74.4 billion from those with no cover and £138.5 billion from those who are underinsured gives £212.9 billion

3 Based on respondents estimation of their level of cover, compared to the estimated value of items they own excluding inherited items and collectables 26% are under-covered. On average they are under insured by £20,378, with £138.5 billion at risk.

4 The average value of possessions for people without out insurance (20% of respondents) is £14,309 (this includes those that don’t know what their level of cover is). With 20% of the population (5.2 million households) that means £74.4 billion worth of possessions is currently uninsured and at risk.

For further information please contact:

John Diviney
020 7294 3696

Claire Foster
020 8285 8682

Direct Line

Started in 1985, Direct Line became the first UK insurance company to use the telephone as its main channel of communication. It provides car, home, travel and pet insurance cover direct to customers by phone or on-line.

Direct Line general insurance policies are underwritten by U K Insurance Limited, Registered office: The Wharf, Neville Street, Leeds LS1 4AZ. Registered in England No 1179980. U K Insurance Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Direct Line and UK Insurance limited are both part of Direct Line Insurance Group plc. Customers can find out more about Direct Line products or get a quote by calling 0845 246 3761 or visiting