How well insured are you?
If you've ever been tempted to slash your insurance premiums by cutting down on cover, Anne Warren's story will be a cautionary tale.
She says she didn't realise the Cardigan pub she ran and lived in was underinsured, but when disaster stuck and the building was ravaged by fire in 2008, she found herself facing a hefty bill for repairs and replacing all her worldly goods, which her insurance didn't fully cover.
Anne's not alone - thousands of people who make a claim are surprised to find their insurance won't cover the full amount they've lost.
X-Ray reporter Rachel Treadaway-Williams took to the streets of Cardigan to find out whether people knew how to insure their homes properly.
She asked for estimates on home much a detached bungalow built in 1965 should be insured for. For the contents, estimates ranged from £5,000 to £50,000 and up to £280,000 for the building itself.
Anne had taken out her policy covering her pub and the flat upstairs on the phone - telling her broker all the details of the property. The pub building was insured for about £200,000. But Anne's now discovered that the rebuild value is actually closer to £400,000.
According to her policy the contents cover was £23,000, but after the fire the bill came to more than three times that. But her insurer would only pay out the maximum on the policy leaving her thousands out of pocket.
As Anne found out, making sure you're properly covered is a potential minefield. Insurance broker Tim Rees offers his top tips:
- Buildings cover - the actual structure of the place. You need to work out how much it would cost to rebuild the whole property in the worst case scenario. A recent surveyor's report would have that figure on it, or there are you can go on to give you an accurate idea.
- Don't underestimate the value of your contents. It's a good idea to make a record of all the items you might need to claim from your insurer. You can itemise everything or take photos, save them to disk and give a copy to someone you trust or store them digitally.It means you have proof of all the items you're trying to claim for and focusing your attention makes you realise exactly how much your precious possessions are really worth.
So what are the common mistakes that people are making when they're insuring their properties?
Tim says: "They forget about things, which is easily done if they're in a cupboard or they wear their clothes and walk out on the street. The other one is perhaps more relevant, they look at the premium and not the cover."
It seems saving money on an insurance policy which may leave you short on cover is a false economy and a mistake you can't afford to make.
Back at her newly refurbished pub, Anne is considering complaining to the Ombudsman about the broker who sold her the insurance policy in the first place because she feels she was wrongly advised about the amount of cover she needed.
