Thousands of homeowners could be under-insured, according to Halifax, which has noted a surge in people renovating properties as opposed to moving home.
Halifax said as homeowners renovate their properties they are failing to upgrade their household insurance. But it is not only household cover which needs to be increased. Other forms of mortgage protection must also be reviewed.
Nick Kirwan, product development manager at Scottish Provident, said: ‘It is better to be over-insured than under-insured ‘ for an extra couple of pounds it is very sensible.’
Scottish Provident recently completed a survey in association with MORI asking those who had increased their flexible mortgage whether they had increased their insurance.
Kirwan said: ‘A third of those surveyed had not increased their insurance, 64% said they had, but it still shows it is important for people to think about insurance. People have an over-inflated view of what the State will provide.’
The survey also showed 77% of people do not actually have mortgage payment protection insurance and when Scottish Provident compiled an identical survey two years ago, the level of penetration was the same.
‘This shows no improvement and proves the message has not been passed on,’ Kirwan said.
Halifax says property price inflation has outstripped building cost inflation by an average of 3% per year for the last five years, which shows improving your home is cheaper than buying a new property.
Howard Posner, managing director at Halifax General Insurance, added: ‘In this climate, it is essential that home insurance cover keeps pace with changing properties.’