Not updating policies to reflect the value of collectibles, antiques and artworks can leave people out of pocket.
Britons could be sitting on a goldmine - by unwittingly holding valuable works of art among their possessions.
Art, along with antiques and collectibles, are often hoarded by householders unaware of how much the items are actually worth, new analysis from Halifax Home Insurance has suggested. Often, they are handed down as family heirlooms, or come in the form of childhood collections which are subsequently packed away and forgotten about.
The firm warned today that many home insurance policies might need to be updated when the value of such items was discovered, in order to make up for the shortfall in cover.
Indeed, underinsurance can lead to some householders being left severely out of pocket. For example, if lost, dameaged or stolen items worth £40,000 are claimed for on a £30,000 home insurance policy, the value of this claim is reduced accordingly by the insurer. In this case, there would be a 25 percent cut in the amount the policyholder can hope to get back.
Halifax Home Insurance also said that it was partly inspired to issue the warning following British artist Damian Hirst's record-breaking Sotheby's auction of 56 of his pieces. The works raised a total of £111 million - bringing home the fact that art is fetching very high prices at the moment despite the economic gloom.
Commenting, Martyn Foulds at Halifax said: "Although in many cases collectables are irreplaceable, most people would at least want to recover any financial loss in the event of them being stolen or damaged. We'd recommend anyone who has a potentially valuable collection to get it valued by an expert regularly and ensure they obtain a dated copy of the valuation certificate."
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