Households keeping cash in the home are being warned to beware of break-ins – especially as most home insurance policies will not cover the full loss.
While cash use has been rising during the cost of living crisis, it is also popular with Millennials and Generation Z trying out the fad ‘cash stuffing’ craze.
Cash stuffing is a saving and budgeting technique that involves putting physical cash into separate pots to pay for things like rent, food and other outgoings.
Although figures on how many people carry out cash stuffing are hard to come by, using physical currency is definitely having a resurgence.
Money trends: Two thirds of under 35 use more cash now than 12 months ago
Soaring costs have triggered a higher use of cash, with many turning to it as a way of keeping track of spending, according to a recent study by Credit Karma.
Youngsters have increased their cash usage more than older generations, as almost two-thirds of under 35s say they use cash more now than 12 months ago.
Earlier this year insurer Admiral warned it had seen a rise in claims where cash was stolen in burglaries, including victims losing large sums of money kept in envelopes.
But most insurers have strict limits on how much they will pay out for cash lost in burglaries, often between £200 to £500.
Admiral said the average claim for stolen cash was for £333.
But the average UK worker takes home £2,728 a month, meaning practising cash stuffing, or keeping cash in the home generally, can mean losing large sums if unlucky enough to suffer a burglary.
Your contents insurance policy may cover cash lost to burglary, but is likely to have strict limits.
How do I know if money theft is covered by insurance?
The only way is to check the wording of your contents insurance policy.
Most insurance policies will cover cash thefts from your home, but most have caps and restrictions on how much you can claim.
The reason for the cap is to discourage unscrupulous policyholders from faking burglaries in the hope of getting free money from their insurer.
Most contents insurance deals (44 per cent) include cover for cash theft of up to £500, according to financial information firm Defaqto.
Around 14 per cent of deals go up to £750, and 18 per cent will cover theft of £1,000.
But after that level the amount of insurers happy to insure higher volumes of cash stolen from the home drops quickly.
Just 1 per cent of contents insurance deals cover theft of £1,500 to £2,000, rising slightly to 4 per cent for sums from £2,500 to £5,000.
However, at the other end of the scale, some insurers cap payouts for stolen cash at just £100, £200, £250 or £300, so it is worth checking your policy wording if this is a concern.
Additionally, your insurer may ask you for proof that you had the cash in your home before it was stolen.
That might take the form of bank statements, photos or other proof.
However, insurers also realise that not every household can prove ownership of every single item in an insurance claim, so many are prepared to take your word for it – especially as they limit payouts on cash anyway.
But insurers will certainly ask for proof that your home was broken into by force, or that someone got access to your property through deception.
This might take the form of a crime incident number from the police.
Insurers will also expect you to make a claim promptly.
