WHICH is the most expensive room in your house? If you are now totting up the value of the plasma TV and stereo in your living room, or the luxurious new carpet in the bedroom, the chances are that you are looking in the wrong place. Hiscox, the insurer, says that kitchens are the areas of most value in many properties.
Homeowners who underestimate the replacement cost of their kitchen risk being left out of pocket if their home is inadequately insured. Of all the rooms in the house, the kitchen is the most vulnerable to fire damage because that is where most fires start. Despite this, Hiscox says that two thirds of homeowners with state-of-the-art kitchens are underinsured by an average of 40 per cent. Buying new kitchen units, work surfaces, an oven, kettle, cutlery, crockery and a fridge-freezer could cost more than £45,000 in some homes, the insurer says. The bill for replacing food destroyed in a fridge-freezer could also reach as much as £1,000.
Figures from the Association of British Insurers (ABI) show that homeowners claimed a total of £344 million to pay for fire damage in 2003. The odds of a person facing a serious fire at home are 300-1.
Ensuring that your kitchen is adequately insured is not as simple as merely raising the limit on your home contents cover. Only moveable items are covered under contents insurance, while fitted units and machines are covered under buildings insurance.
Richard Mason, of moneysupermarket.com, the price comparison website, says: “The best way to decide which cover applies is to think of turning your house upside down. Items that move will be covered by contents cover; everything that remains in place will be insured by buildings cover.”
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You do not have to insure your contents and buildings with the same insurer. Strong competition in the market means that you can save hundreds of pounds each year by searching for the best deal. But the ABI says that using the same company can often help to streamline the handling of any claims.
Most people, however, never update their insurance policies after costly home improvements, leaving themselves vulnerable to losing money if a fire devastates their property. Hiscox says that homeowners need to revalue their homes every one to three years, or after purchasing expensive items or redecorating. They should then check that both contents and buildings cover is adequate.
Some policies offer “indemnity cover”, which replaces items on a like-for-like basis. Such policies will reimburse you for the cost of destroyed items once wear and tear has been taken into consideration.
New-for-old policies pay the full cost of replacing each item. These policies are often more costly but could save thousands of pounds if you have to re-fit several rooms. You should tot up the cost of buying a new replacement for every item you own.
If you bought a kitchen table five years ago, it is highly likely that you would have to pay more for it now than you did in 2000. If you bought your kitchen units in a sale, the cost of replacing them will probably be greater than the amount you paid.
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Do check the small print too. Some insurers put a limit on the amount of cash that can be claimed for each item, so you will need to make up the difference. If the cost of your hi-tech microwave or food processor exceeds this limit, you will have to make up the difference.
Likewise, if your fridge contains a couple of bottles of champagne and your freezer is packed with expensive goodies, it may be worth increasing the limit for perishable goods, pegged at just £250 and £300 on many policies.
You will also have to pay an excess on any claim. The standard excess is about £250. Some insurers allow you to lower this if you pay a slightly higher premium.
CASE STUDY
PEACE of mind is a top priority for Stephanie and Jim McDowell, from Rickmansworth, Hertfordshire.
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The couple have taken out home contents cover which has no maximum claim limits. The policy from Hiscox, the insurer, allows the couple to be reimbursed in full for any claim.
Stephanie, a fashion buyer, and her husband Jim, a 39-year-old marketing director, spend a lot of time in their state-of-the-art kitchen and they wanted to make sure that they would not lose out if there were any mishaps.
“Many years ago I encountered difficulties with an insurance firm when I submitted a claim,” Mrs McDowell says. “It was very stressful, so I wanted a ‘no-quibble’ policy. I would rather pay a little bit more for true peace of mind.”