A home insurance firm has revealed that many British homeowners are paying “over the odds” for their home insurance cover.

The insurance company conducted a survey which showed that nearly one-third of people in the UK believe that the rebuild cost of their house is the same or more than its market value. Subsequently it has been suggested that these people may find themselves being charged too much for their buildings cover.

Head of home insurance Darren Black said: “The fact that one in three consumers considers the rebuild cost to be the same as the market value is unsurprising as it's difficult to calculate, but it could see them paying over the odds, year-on-year.”

The cost of living and paying high home insurance rates is also a similar story in America, where home cover rates have shot up.

“The industry is really making money on both ends,” said Alex Winslow, executive director of the consumer advocacy group Texas Watch. “They're reducing coverage so they have less exposure and less risk, and they're charging at least as much as they were before the reduction in coverage.”

The cost of living

It has also been exposed that four out of ten homeowners struggle to pay their household bills, but charity Age Concern has issued a warning for property owners to not cut essential expenditures.

Age Concern advised those who are angered over their home insurance costs to not neglect the policy as this could be a false economy especially as claims are likely to rise after recent bad weather and rising crime.

The organisation reminded the public that the cost of contents cover is far cheaper than having to replace them, if they are stolen or destroyed. Similarly, home insurance is a negligible cost compared to that of repairing damage done by floods or burst pipes.

Black said: “During a recession there is a general trend for consumers to rationalise their household spend. Unfortunately some people see the safety net of home insurance as a "nice to have", rather than an essential. With the increase in burglaries and more frequent extreme weather conditions this is an increasingly risky gamble to take, let alone the fact that it is a condition of most people's mortgage that they have building insurance.”

It is vital for those of lower incomes such as the elderly or young families to ensure they are sufficiently covered, as the cost of replacing or repairing items would be felt more.

In addition, the Association of British Insurers (ABI) recommended that households stay aware of their insurance needs and re-evaluate their home and contents cover yearly.

 Home extras, such as conservatories or a better grade of door lock, make a difference to homeowner’s status, as do recent Christmas additions, such as electrical equipment.