'Half of property owners underinsured'

Posted : 15-02-2008

Close to half of people who own a property in the UK have a home insurance policy that undervalues their assets, it has been suggested.

According to Norwich Union, millions of Britons have not secured a home insurance estimate that is based in the mortgage value and not the costs that would be incurred if extensive damage were caused to the building.

In addition, the home insurance provider has claimed that any value estimate is likely to become increasingly inaccurate over a period of time and could under certain circumstances leave property owners out of pocket, report the Insurance Times.

"Clients need to be aware that if adequate insurance is not taken out, tighter lending conditions and increased borrowing costs due to the credit crunch could make it very difficult to find the necessary funds themselves to rebuild a property," said Mike Colmans, property owners underwriting manager at Norwich Union.

Earlier this week, Steve Johnson from Sainsbury's Finance issued a similar warning to buy-to-let landlords over the potential problems associated with inadequate home insurance.

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