Home insurance won't protect £5.4billion stashed at home due to fear of savings accounts

08 December 2008 / by Rachael Stiles
More than £5.4billion in cash stored in British homes instead of in savings accounts is at risk from burglary and probably isn't protected by home insurance, Abbey has warned.

Thousands of Brits have started stashing their at home cash instead of in savings accounts due to fears over the stability of banks, since the collapse of the Icelandic financial system which took UK savers' Icesave deposits down with it.

The average amount saved in the home by some 4.6 million households, which they would ordinarily have deposited in a savings account, has risen to £729, and 2.8 million savers withdrew an average £704 each in the last 12 months, specifically in order to store it in their homes instead of in a bank or building society.

But Abbey has warned that these home-savers are at risk of losing the cash completely if they are burgled and the money is not covered by their home insurance policy, as most insurers only offer limited cover for cash stored in the home.

As a likely social consequence of the current economic forecast, experts are predicting a rise in the number of burglaries, putting even more people at risk of losing their cash. According to Abbey's analysis of burglary figures from the last recession of the early 1990s, household crime saw a rise of more than a third.

Abbey found that many Brits who use their home as a piggy bank would not be fully covered by their home contents insurance if they were unlucky enough to have it stolen.

What's more, the bank said that if Brits put their savings under the mattress instead of in a savings account, then they will not be earning any interest on their hard-earned money.

Tony Beckwith, chief operating officer at Abbey Insurance commented: "The banking world has had a turbulent year but the systems to protect deposits and savings are in place meaning that all of us have a high degree of security. Hoarding cash in your property doesn't make sense." he said, referring to the £50,000 compensation guarantee offered by the Government.

"Most insurers will only cover the first £500, sometimes less, should it be stolen or destroyed in an accident and you're not going to earn interest on cash stuffed under the mattress. Even those people planning on handing over substantial Christmas cash gifts should consider whether their insurance provisions are adequate."

© Fair Investment Company Ltd