In 1997, the average sum insured by a contents policy was £22,490. By 2002, the value of the cover provided had fallen to £22,191 – a decrease of 1.3 per cent.
Commenting on the research David Quick, CETA’s Managing Director said: “We were surprised by the results of our analysis. Over the last five years, people have enjoyed a higher standard of living and retail sales have been strong so you would expect the value of people’s possessions to have risen significantly.”
“However, we know that people consistently under-estimate the value of their belongings. Sometimes this is accidental while other times homeowners deliberately underinsure in order to reduce the cost of the cover. This is a false economy and when things go wrong they will be pleased that they had the correct level of cover in place’.
CETA believes that financial intermediaries are ideally placed to provide the objective advice clients need to ensure that their possessions are insured for their true value. There is also a large untapped market for brokers to target as nationally around 40 per cent of households are reported to have no contents cover at all.
CETA’s survey also found that in 1997 the average household premium – buildings and contents cover - was £186.04 compared to £223.40 in 2002 – a rise of just over £37 in five years. The majority of the increase in premium can be accounted for by the fact that homeowners have increased the value of their buildings cover by 17 per cent from £70,692 to £82,841 since 1997
David Quick added ‘‘Paying on average just over £220 per year to protect your most valuable asset – your home and all your worldly goods - must represent good value for money. It is a message intermediaries should hammer home when talking to their clients’.
Brokers and financial advisors interested in knowing more the contents valuation calculator and CETA’s household insurance policies should call 01608 647647 or visit CETA’s website at www.ceta.co.uk for more details.
