The insurer’s research revealed that Brits’ homes are underinsured by more than £255billion, leaving many out of pocket to replace their possessions if disaster strikes and their home insurance policy does not cover all their belongings, or the insurance is invalidated.

The average house has home contents insurance worth just under £29,00, which leaves a gap of more than £9,000 between the insurance and the average value that homeowners place on their contents, which is just under £38,000.

While times are hard during the current economic crisis people are looking for ways to cut costs and this could encourage them to go for the cheapest home insurance quote, but this might not be the answer if they are left struggling to replace their belongings if their insurance proves inadequate, AXA warns.

“It may seem a good idea to many – particularly in today’s climate – to pick the cheapest option when it comes to home insurance and save a few pounds, but £20,000 or even £30,000 worth of insurance is unlikely to cover all the contents in your home.” said Nick Kidd from AXA home insurance.

“It’s very easy to under-value your possessions.” he explained. “When taking out home contents insurance, it’s absolutely vital you have a clear idea of what your possessions cost: under-insuring could lead to your policy being invalidated.

“We would advise people to keep receipts of all major possessions, take pictures of their most valuable items and factor in realistic replacement costs for things you may not have considered, such as personal effects.”

AXA discovered that consumers often fail to take everything into consideration when estimating their home contents’ value, leaving out things such as home accessories and garden furniture. When these are added to the total, the estimated value rose from £29,000 to £38,000.

Some insurance companies offer additional protection for certain times, such as weddings, birthdays or Christmas to account for the additional value. Saga home insurance, for example, is offering its customers 10 per cent extra cover in December, and Saga motor insurance will double its cover for belongings to £2,000.

Chief executive of Saga Services, Roger Ramsden, said: “Despite it being the season of goodwill, there are some unscrupulous individuals out there willing to steal presents from the boots of cars or from under our Christmas trees. Saga Insurance has chosen to provide that extra level of cover at the time of year when people have more valuables in their cars or homes.”

© Fair Investment Company Ltd