Because you're worth it: don't go uncovered

One in five households don't bother with a policy, Esther Shaw discovers, but if disaster strikes they'll be left badly out of pocket

Disgruntled Apple customers may be complaining about a delicate screen on the latest iPod but our love affair with all things hi-tech is still going strong. A hefty chunk of the near £60bn racked up on our credit cards is down to our thirst for electronic goods.

But while adept at spending to fill our homes with gadgets, we are rather less willing to fork out on protecting our new goods against loss or damage through fire, theft or flooding.

Even though £1bn worth of items is stolen from UK homes every year, many of us continue to scrimp on home contents insurance and leave ourselves exposed in the event of a claim. In fact, reports insurer More Than, one in five households have no contents cover at all.

Two key points lie behind this apathy. First, lenders insist that homebuyers take out buildings insurance, but make no such demands for contents.

Second, we continually underestimate how much we're worth. A typical family home in the UK now contains £44,447 worth of possessions, estimates More Than. Unfortunately, we tend to reckon we're worth barely half that, it adds. So the loss of much of what you own in a storm or burglary could leave you high and dry.

If you think there's no way your possessions could add up to a value of nearly £50,000, bear in mind that contents insurance covers you for a wide range of goods, from kitchen equipment and frozen food to CDs, videos and clothes.

"People think buildings cover is a higher priority than their contents because the cost of rebuilding a property is so high," says Richard Mason from the price-comparison website insuresupermarket.com. "Yet in reality, you are much more likely to be broken into than have your house burn down."

To give yourself proper contents cover, start by drawing up a list of what you own, and then work out what it would cost to replace everything new. You may well come up with a surprisingly high estimate.

If this seems too much of a chore, some insurers offer a blanket contents policy, although the amount of cover can vary. Churchill, for example, offers £40,000 and More Than £60,000.

Contents policies usually provide either new-replacement or "indemnity" cover, the latter deducting a sum from your overall claim to account for wear and tear; you pay a smaller premium as a result.

For cheap cover, consider buying online and increasing your voluntary excess; both could save you 10 per cent. Tighter security - burglar alarms and key-operated windows - will further bring down premiums, says Mr Mason.

And think carefully before making minor claims, he adds. "The excess payment, and potential increase in premiums, may mean it is better to pay for smaller repairs yourself."

Some insurers operate no-claim discounts. Privilege says it will beat renewal quotes for claim-free homeowners.

Run the rule over your policy as special cover for legal costs, expensive items and emergency call-outs may be unnecessary extras. Getting rid of these could cut premiums by 40 per cent, says Mr Mason.

Natasha Marshalsea, 23, from Calveley in Cheshire, chopped £56 off her annual premium by shopping around.

Contents cover worth £15,000 cost £180 with Direct Line but renewal brought a shock. "The new quote was nearer £200, which annoyed me as I'd made no claims," she says. "I went on to insuresupermarket.com and got the same cover for £124 at Supermarket Insurance."