Make this mistake and lose thousands

by Alison Hunt on 22 November 2009  |  12 comments
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If you make this mistake, you could potentially lose thousands of pounds.

When was the last time you read the small print of your home insurance policy?

If the answer is: never, then you probably don't realise that, buried in the small print, there's likely to be a clause that puts your most precious - and valuable - belongings at risk.

It's called the 'single article limit' and it's a big problem for anyone who owns anything valuable. 

Single article limits

Most insurance companies will only automatically cover valuables up to a certain amount. This is where the single article limit kicks in. Usually, only items worth up to £1,500 (or sometimes, £2,500) are covered as standard. For example, Aviva offers up to £6k of valuables cover, with a single article limit of £1,500. So if you have an item valued at over £1,500 it will need to be named separately on the policy.

If it's not, the insurer won't pay out in the event of a claim - which means you could lose thousands of pounds simply by failing to spot this clause!

The true cost of valuables

Unfortunately, adding cover for high value items to your policy can push up the cost of your premiums dramatically.

Take the case of lovemoney.com member kalbery, who posted a question on our Q&A tool, asking: Does anyone know any good home contents insurers that don't fleece you once you add on rings, watches etc as high value items?

Turns out kalbery is about to get married. After adding an engagement ring to her policy, she saw her contents policy premium double. Now, she wants to add two more high value items to the policy (30th birthday presents) and is worried her premium will rocket again.

The first step

The first thing kalbery and anyone else in this position needs to do is check the terms of your insurance policy for valuables cover, and in particular the single article limit. Although kalbery's engagement ring clearly breached this sum, if the gifts she will receive are each valued at less than the single article limit (and in total less than the valuables limit) she will have nothing to worry about as they are automatically insured.

However, if the items exceed the single article limit she will need to name them on the policy, or they won't be covered.

Higher valuable limits

Top lovemoney.com poster manzanilla's response to kalbery's question reckoned it could actually be cheaper to go for a more expensive policy which offers a higher limit for individual unlisted items, naming Hiscox as a recommendation.

Hiscox insurance does indeed offer a very good level of cover (it also has the highly regarded 5 star defaqto rating). And most interestingly, it offers valuables cover of up to £15k as standard, stating that there is no need to list individual items as long as in total they do not exceed this limit. Axa insurance, too offers increased valuables cover of up to £12,000 which will more than cover many people's jewellery and other expensive items.

So depending on how much the valuables are worth in total, Kalbery could find they would be automatically covered.

Increase the limits

But, in some cases, it may be cheaper to simply increase your single item limit on a standard policy. I gave a few insurers a call to find out how much it would cost, on average, to do this:

Average cost to increase the single article limit on a typical policy

As you can see, it's only £10 to increase the single item limit on a typical Aviva policy, but it would cost an extra £40 with Direct Line and Churchill - again, demonstrating just how important it is to shop around!

Paying the extra

Of course, the insurers called were quick to explain that the exact increase will depend upon your particular circumstances. But it's worth noting that, with average prices starting at just £10 a year, if you've got a comprehensive insurance policy already, it may not be as expensive as you think to add items to your existing policy or increase your valuables cover.

Slash those insurance premiums

Finally, when the time comes to renew your policy it's important to ensure you get the most suitable cover for the best price. Adopt this goal - Buy the best policy at the best price - and hopefully you'll save a few quid.

Alternatively, head over to Q&A yourself and ask a question. The lovemoney.com community is full of knowledgeable tipsters who can offer you free help and advice about insurance.

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