Homes face £4.9bn jewellery under-insurance risk

Monday, 01 February 2010 01:13

By myfinances.co.uk staff

Almost 17 million homes in the UK could be undeinsured because people do not know the real vlaue of their possesssions, specialist over 50's insurance provider RIAS has warned.

It say shouseholds are at potential risk of leaving their jewellery underinsured to the value of £4.9 billion because the cost of gold has risen by 25% in the last year.

The increase in the price of gold has been prompted by investors fleeing to safety in the last twelve months with gold being considered the safest and most reliable investment on the market.

RIAS says there are up to 112 million items of gold in homes across Britain, with an average total value of £1,189 per household - meaning that the total value of gold jewellery and other items owned by UK households stands at £19.7 billion.

But nearly two thirds (61%) of people have never had any of their gold items valued suggesting millions of consumers could be under-insured by around £297 per household or £4.9 billion nationally.

It warns millions of consumers' home contents insurance policies could be out of date meaning policyholders may be in danger of receiving substantially less than they should for their 'high-risk' items if they suffer theft, loss or damage.

The online study suggested the over 50s were particularly at risk from an 'under-insurance trap'.

According to the survey, over 50s tended to own more gold items than the average UK household and the value of over 50s' gold tended to be higher, averaging £1,313 in total per household, compared with those under the age of 50, whose gold averaged at £1,085.

The research found that more than half (55%) of over 50s who own gold have failed to have any gold items valued since they were originally purchased, and that the vast majority (93%) have not had their items revalued in the last two years, as is generally recommended.

The study also found that seven out of ten (71%) over 50s do not have any of their gold items specified as 'high-risk' on their insurance policy, meaning they could be subject to single item limits which could be lower than their true value.

Despite the price of gold rising by a 25% to £709 per ounce in January 2010, just 11% of consumers are aware that the market value of gold has increased and so have not informed their insurance provider.

Janet Connor, managing director at RIAS, said all consumers would be wise to ensure all their 'high-risk' items were regularly revalued to avoid any nasty surprises if they did have to make a claim on their household contents insurance.

"The most an insurer will pay for any high-risk item is the sum the customer has insured it for, as reflected in their policy schedule. By reviewing the value of individual items every two years, and updating policies as necessary, consumers can eliminate the risk of being under or over-insured," he added.

Matt Graydon a spokesman for The World Gold Council added: "Last year the gold price rose 25% in value, while almost all other assets headed in the other direction. Gold's wealth preservation characteristics have become centre stage during this period of economic turmoil but remain important to investors during any period of time.

"Due to its enduring value gold remains a sound investment for future family heirlooms. If you already own some gold items you may be surprised at how much they are worth and so it's worth looking into a valuation sooner rather than later."

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