Make sure your home insurance covers this!

If you're one of the walking wealthy, you need to be sure you're covered!

The next time you take a walk -- to the shops, perhaps, or to the gym -- consider exactly how much you’re worth.

Not as a human being, or even as the sum of all your worldly assets. I mean -- what is the total monetary value of the belongings you have on your person?

Are you one of the ‘walking wealthy’?

The average UK adult carries £972 worth of belongings around with them, according to Zurich Insurance.

Unsurprisingly, gadgets like mobile phones, Blackberries and iPods often make up the largest chunk of a person’s ‘walking wealth’, with designer bags and flash jewellery also playing a big part.

Protect yourself!

However, it seems many of us are failing to grasp what a splendid target we are for muggers. Some 74% of those questioned were not aware of how much their possessions cost, and 57% underestimated their value by over £380.

I was guilty of this recently. My mobile phone is ancient, I don’t wear much jewellery and I don’t even have a Blackberry, so after a moment's thought I decided what I was carrying couldn’t possibly be worth more than £300. 

When I sat and totted everything up, however -- bag, clothes, accessories, gadgets and all -- it came to nearer £500.

And we aren’t doing enough to guard against disaster. When it came to protecting their possessions, a quarter (23%) of those surveyed admitted they didn’t have any sort of personal possessions cover to insure items away from the home.

This is worrying stuff. If I’m mugged or pick-pocketed, the last thing I want is to face financial as well as emotional trauma.

So, in a nutshell, make sure you understand the value of the items you carry around with you -- and check that your home insurance policy covers them all, wherever they are.

Home insurance checklist

If you’re choosing a new policy -- here are a couple more things to think about:

Unlimited cover: It may be worth your while to pay a little bit more for a policy that offers unlimited cover.

When your home is insured for an exact amount, you need to be very clear about just what everything is worth. If you forget to include anything, underestimate the value of an item or add the whole lot up incorrectly, you run the risk of being under-insured.

If this happens -- and you lose the whole contents of your home (through fire, for example) your provider is under no obligation to pay out for your full claim.

Just remember that even with unlimited cover, there’s likely to be a limit (usually around £1,500) on each individual item.

Added extras: Some insurers offer valuable extras which can make a huge difference at a difficult time.

A ‘Christmas cover increase’ means that your insurer will automatically increase your level of cover over the festive period, to guard against burglars making off with your tree presents and other seasonal disasters.

‘Emergency home repairs cover’ means your provider will pay out if you need to deal with a domestic emergency quickly -- like getting a burst pipe fixed within 24 hours.

Related blog post

• Jane Baker writes:

  The most important financial decision you’ll ever make

  Guest blogger Brian Morgan, director at Heath Lambert Consulting explains why choosing how to take benefits from your pension is never a decision to be taken lightly.

  Read this post

And if you haven’t made a home insurance claim recently, it’s also worth hunting down a policy that offers you a ‘no claims discount’. The percentage discount will usually depend on the number of consecutive claim-free years you have under your belt.

How to get cheaper cover

So, you’ve decided on the cover you need -- but you don’t want it to cost the Earth.

Shop around! In cost-cutting terms, I think the single most important thing you can do is shop around for your next policy when your current one expires.

When it comes to home insurance, loyalty very rarely pays. Usually, new customers are offered the best deals, while existing ones are the cash cows of the industry.

My recent experience demonstrates this perfectly: Last week, my partner and I received a letter from our home insurers, telling us that our policy was due to expire.

They emphasised that we needn’t do anything; unless we contacted them, our policy would be renewed for another year.

Recent question on this topic

• rdonald asks:

  Is our neighbour liable for water damage?

  • 
    MikeGG1 answered "Heavy rain can be considered as storm but, from what you say, your roof is not the problem...."
  • 
    rdonald answered "Thanks Mike - we're now waiting for the insurance assessor and we'll see what he has to say!..."
  • Read more answers

All most helpful… until I tracked down the teeny writing at the bottom of the page -- which informed us that on renewal, our premium would double. Eeek!

Obviously, we sprang into action and found a much better deal elsewhere – as new customers. You have been warned!

Bulk buy: Buying your buildings and contents insurance from the same provider can often work out cheaper.

It also makes things simpler if you do have to put in a claim - as you only have to deal with one organisation.

Bump up security: Finally, making your property more secure could have the added benefit of slashing your premiums.

If you fit burglar alarms linked to the police network, and install good quality window and door locks, and you could see your premiums fall by 15% or even more.

Good luck!

This is a lovemoney.com classic article, originally published in August 2008 and updated

More: Good news for everyone with a current account | Seven ways to beat higher household bills