Research shows that most UK householders underestimate the cost of rebuilding their home and replacing its contents. As a result, when they come to making an insurance claim after an incident such as a burst pipe, a burglary or a flood, they can encounter problems.

A homeowner might, for example, insure his contents for £100,000 when he really owns £150,000 worth. If an incident results in £120,000 worth of loss or damage, insurers may only pay out an amount in proportion to the level of underinsurance - in this case, just £80,000. Worse than that, the insurer might conclude that the homeowner has fraudulently underestimated his sums insured and treat the policy as null and void, making no payment at all.

Homeowners often only realise this shortfall when they come to make a claim, explains Richard Evans, Private Clients Manager at Realty Insurances, who have been arranging insurance for people living on the Grosvenor Estate for over 60 years.

Realty advises homeowners to consider the total value of their possessions at least once a year, normally when their policy falls due for renewal, because they may have acquired more items than they realise. Likewise, if you have made improvements or renovations to your property, you need to make your insurers aware of the increased buildings sum insured.

The specialist cover arranged by Realty means that insuring for the correct value doesn’t necessarily mean that your premium will increase. You could be insuring the contents of your home as general contents for £200,000, but Realty may be able to put the contents into different categories in order to widen your cover and, at the same time, reduce your premium.

"It is entirely possible that a client with £200,000 of contents has £100,000 of general contents," Richard explains. "The remaining £100,000 could be fine art, which might include anything from pictures and antique furniture to sporting memorabilia or a collection of antique fruit machines. The rates that insurers charge for fine art is lower than the rate they charge for general contents."

Jewellery is the most expensive item to insure, but Richard says there are ways of saving money. "Most insurers look to insure all of a client’s jewellery all of the time on a worldwide basis. But if a client with jewellery to the value of £100,000 will only wear or take on holiday £50,000 worth, a number of insurers are prepared to insure £50,000 of the jewellery on a worldwide basis, and insure the other £50,000 while it's in a safe at the home only. This can save a large amount of premium without impacting upon the client’s actual lifestyle."

Realty Insurances are based in Mayfair and offer personal service and competitive rates to people living on the Grosvenor Estate.

For professional advice on any aspect of household insurance, or a free, no obligations review of your current policy cover, please contact Richard Evans at Realty on 020 7941 8231.