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Why Bad Maths Could Cost You a Fortune

You probably wouldn't fall for the classic political trick of being challenged to put a price on a pint of milk. But have you ever given much thought to the value of your kitchen appliances?

Have you seriously thought about how much it would cost to rebuild your home from scratch or even just the contents of your wardrobe?

These may be numbers we are obliged to provide to insurers when applying for products like car and home insurance, but getting them wrong can have serious consequences.

Research from price comparison website uSwitch shows that more than a quarter of drivers – 27 per cent - simply guess their annual mileage, even though overestimating it can leave them overpaying for their cover. Underestimating that mileage could even potentially invalidate their policy entirely.

Checking annual mileage is as simply as reading the last MOT certificate, which shows precisely how many miles were covered in the previous year. Yet just a fifth of drivers do so, potentially because 48% don’t realise that providing inaccurate information could invalidate their policy.

Rod Jones, insurance spokesperson at, says: “While many of us are guilty of relying on gut feeling when providing our mileage information when applying for a car insurance policy, misjudging the number of miles you drive in a year can have a real impact on your wallet.

Not-so-simple sums

If you don’t check your home contents insurance relatively regularly then you risk finding that you are underinsured when you come to make a claim. And, with home insurance, this can mean the entire value of your claim is slashed, even if you’re claiming for less than the total amount you have insured. has warned that only half of home contents policies automatically index-link premiums, meaning that if you have had the same cover in place for a number of years then it almost certainly no longer reflects the true value of your belongings, leaving you underinsured.

In addition, that’s before the factor in the recent growth in electrical goods and gadgets. Many homes are now littered with tablet computers and personal technology, yet the last time the householder priced up their possessions was back when being able to play ‘snake’ on a phone felt futuristic.

This can leave you severely out of pocket. Ben Wilson from Home Insurance says: “What many people perhaps don’t realise is that if their insurer thinks that they are underinsured - it will pay only the corresponding percentage of a claim. This could result in a shortfall of thousands of pounds.”

So, if your possessions are worth £40,000 and you tell an insurer they are worth £20,000 then it is likely they will only pay half of any claim. For example, if you claimed for £10,000 of damage they might refuse to pay more than £5,000, making underinsurance a particular problem when buying contents cover.

It’s better and safer to check the contents of your home regularly, on a room-by-room basis, and make sure your estimate is as accurate as possible.

Reassessing a rebuild

At least most people are able to have an informed stab at working out how much their possessions are worth for contents cover, however, for buildings insurance estimates can again be very dodgy.

Research has shown that 67 per cent of people do not know the rebuilt cost of their home and 35 per cent believe that the rebuild cost and the house value are the same. Overpaying means potentially paying too much each month, however, even more worrying are the 10 million homes that the insurer suggests could be under-insured.

Simon Stanney, director of insurance at SunLife, says: “In the unfortunate event that your home requires a complete rebuild and your buildings insurance is not sufficient, you will be left to cover any difference in price. Worse still, if your property is mortgaged you could be left with no home and thousands to pay back to your lender.”

The best way to get an accurate rebuild cost is to get a surveyor to carry out detailed measurements of your house and then prepare a professional Rebuilding Cost Assessment.

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