Why you may get NOTHING from your insurer if your presents are pilfered from under the tree

Christmas trees will have hundreds, if not thousands, of pounds worth of presents underneath them this festive season. But those generous gifts could leave you out of pocket if disaster strikes.

In some cases, households could be left without any insurance cover on their home contents in the case of a break-in.

Experts say this is because as many as nine in ten homes have under- estimated the value of possessions declared to insurers, a situation that is exacerbated at Christmas.

Jewellery, watches and the latest smartphone can cost thousands of pounds but may not be automatically covered by your policy. 

So you may not be protected in case of theft or damage if you don’t tell the insurer they are in your house for Christmas.

Expensive Christmas presents such as jewellery, watches or the latest smartphone can cost thousands of pounds but may not be automatically covered by your insurance policy

There is typically an 8 per cent rise in break-ins over the holiday period, as opportunist burglars take advantage of empty homes and the extra goodies bought for loved ones, according to security firm Safe.

The average burglary claim is for £2,300 at this time of year, according to trade body Association of British Insurers (ABI).

What happens if you are underinsured?

Millions of people could be at risk of underinsurance, which is when a homeowner has underestimated the total value of their possessions and so is not covered for the full worth of their contents.

Jeff Salmon, founder of insurance claims management company Salmon Assessors, believes as many as nine out of ten homes could be underinsured — with households often undervaluing the contents of their home by tens of thousands of pounds.

So a family with contents worth £40,000 — but who have valued them and have cover for only £20,000 — would be 50 per cent underinsured. 

Even if the amount you claim is less than the total sum insured, you won’t have paid the right premium for the cover you need and the payout will be adjusted accordingly.

For example, it means that if they need to claim £15,000 worth of stolen goods, their insurer might pay out just 50 per cent of that — £7,500.

In extreme cases, if you have vastly underestimated the value when taking out cover the insurance company could throw out your entire claim, Mr Salmon warns.

This means you could receive nothing and have your premium returned because you are deemed to have been insured under incorrect information.

Mr Salmon says: ‘In one case, a London couple stored £100,000 worth of home contents in a lock-up for three months this summer — only for the whole lot to go up in smoke during a huge fire.

‘They had paid £12 a month to be insured for £6,000 rather than £30 a month to be covered for the full £100,000.

‘Sadly, they lost everything because they had not given a realistic valuation.’

These rules apply all year but are particularly pertinent over the festive period.

Check out your policy’s small print

The good news where Christmas is concerned is that four in five home insurance policies temporarily increase the cover for your possessions over Christmas, according to comparison website Go Compare.

But that means one in five homes may not benefit from this clause in their policy. So it is still vital to check your policy details.

Insurance giant LV automatically increases the amount it covers for valuables by 10 per cent, specifically to include Christmas presents you may have bought for others, says Sarah Smith, head of underwriting at the group. 

But you should still list individual items worth £1,000 or more for your contents’ insurance policy, no matter who your insurer is.

Experts say as many as nine in ten homes have underestimated the value of their possessions declared to insurers

That way there is less chance of an insurer trying to wriggle out of paying a claim. You should also keep receipts in case you need to make a claim.

Gifts made to loved ones who live in your home should automatically be covered under the same policy. 

But it is crucial that you know the total amount your contents insurance covers you for — as a house full of gifts could push you beyond your cover limit. This could inadvertently leave you underinsured.

According to professional advice website Unbiased, the average home has at least £35,000 worth of goods. Ceri McMillan, of Go Compare, says: ‘If you are planning to buy expensive gifts for loved ones, you may need to review your home insurance policy. 

All policies have a “sum assured” — the maximum payout on a claim. If you undervalue home contents, you must pay out the shortfall.’

Be realistic about how much your valuables and gifts are worth.

You might be surprised when adding up items such as laptops, smartphones and engagement rings, just how high it can be. 

Add up the value of your contents room by room. Don’t forget your attic, basement and garage.

Work out the cost to replace the item now, not what you paid for it. Look up the most recent price of the item to understand this, Lloyds Bank warns.

Insurer Admiral says that high inflation may have increased the total value of your possessions.

A spokesman says: ‘We advise everyone to check their cover for jewellery as the value of gold and precious stones may have increased above inflation.’

Extra cover: Four in five home insurance policies temporarily increase the cover for your possessions over Christmas

Burglar alarms, locks on windows and security door locks can knock 15 pc off premiums.

It can also be wise to install a £10 timer so lights inside go on at certain times of the day to give the impression someone is at home if you are away visiting relatives.

Be wary of leaving wrapped gifts in clear view of a window.

Don’t post details on social media of where you are at Christmas — and any lavish gifts you have bought or received — as this can tip off burglars.

Get personal protection

A gift should be covered by the insurance policy of the person who bought it while it is in their home.

Once the wrapping has been ripped off, it comes under ownership of the recipient.

If the new owners are staying at your house, your own insurance should cover against theft or damage. 

However, in the case of expensive jewellery or electronics, it’s vital the recipient checks with their own insurer.

A spokesman at the ABI says: ‘You could require additional personal possessions insurance. 

This may be part of your standard cover or an add-on worth paying for.’

Personal possession, also known as personal belongings insurance, covers your valuables when you’re out and about. 

You can usually buy it as an add-on to your home insurance for around £30 a year. According to Unbiased, the average home and contents insurance cover is typically £150 a year.

It’s not too late to get cover

Most insurance firms are closed on Christmas Day, but have hotlines for inquiries over the festive period. 

Queries can also be sent by email or via an online ‘chat’ facility.

Only one individual can claim on their insurance if goods are stolen. 

This should be the person from whose house they were stolen. 

If thieves steal from a car, you may be able to claim a typical maximum of £100 for contents on your vehicle insurance.

Under home insurance personal possessions cover, you can often claim up to £15,000.

This post first appeared on Dailymail.co.uk