Money: Gadget boy, take cover

More and more houses have hi-tech gear, says Stephen Pritchard, but theft claims may be rejected

That new widescreen television looked attractive in the store. Now it's in the lounge and it's looking inviting to a thief. And the bad news is that your insurance might not cover it.

We are spending more than ever on consumer goods. Market research firm Mintel says one in three homes now have a computer; 88 per cent own or rent a video recorder. The switch to digital technology is also increasing the value of home electronics. Digital TVs, camcorders and radios cost more than the analogue equivalents; home computers are growing fast too.

Insurers say this is leaving some people dangerously under-insured, or in some cases uninsured. Several leading insurers require customers to specify "valuable" items on their policies. Failure to do so means that, if the goods are stolen, the insurer won't meet the claim in full. Householders might think their high-value gadgets are insured against accidental damage - kids, pets and DIY accidents are common - but unless specifically included in a policy, they won't be covered.

Royal & SunAlliance is just one large insurer with a relatively low single-item limit for high-risk items - pounds 1,000. It will insure more costly equipment, but is likely to charge extra. "High-risk items are things that are thief-attractive," says John Barrow, senior household underwriter. "A grand piano is valuable, but is not as attractive to a thief due to its size. What we mean is TVs, hi-fi, video equipment and computers." If a customer claimed for a high-risk item of more than pounds 1,000, and had not specified it, Royal & SunAlliance would only pay out pounds 1,000. The extra, insuring more expensive hardware, is fairly low but insurers may impose conditions. "We may ask for a minimum standard of security," says Mr Barrow.

Most insurers have similar policies and limits for high-risk goods. Some, such as CGU and Norwich Union, have no rules for individual items, so they might suit households with a relatively large amount of expensive gear. But insurers might still restrict the proportion of cover they will allocate to equipment such as TVs and hi-fis.

As a rough rule, anyone with valuable items making up a third or more of their total possessions will have to pay extra. Some insurers might not offer cover at all, especially in inner cities. This hits younger home owners hardest, as they are more likely to have a decent TV and hi- fi than an expensive sofa.

It is even more complex for items used outside the home, like cameras and camcorders. There is no automatic cover on most policies. Instead, households have to pay extra for "personal possessions" or "all risks" cover. Norwich Union and CGU have a pounds 1,500 limit, but both will look at higher-value items if told about them. Several insurers have much lower limits. Barclays, for example, restricts single personal possessions to pounds 500. This will exclude most camcorders, and many cameras and musical instruments.

Enthusiasts who earn money from their equipment need to be wary too. Insurers have their own rules about professional use and are unlikely to cover, as standard, music gear used to play a pub gig or cameras used to take pictures for publication. So check the terms, and if the insurer isn't happy approach a specialist. Firms such as Stafford Knight, Entertainment and Leisure, and Alliance have dedicated policies for groups like musicians and photographers.

Insurers are becoming more open-minded about people who work from home. A few years ago it was hard to insure home computers without a specific business policy. A computer was seen as business equipment, even if only used to play games. A home PC is no more risky than an expensive TV or hi-fi, and the better policies usually cover a certain amount of business equipment as standard. Norwich Union gives its customers cover up to pounds 5,000 at no extra charge; anyone planning to work at home should seek a similar policy.

"Insurance companies have woken up to the fact that people work from home, and exclusions [of such] equipment have been removed from policies," explains Ian Jones, director at insurance broker Tolson Messenger, which specialises in cover for home workers. Generally, a person who does office-type work from home and has no business visitors should not need separate insurance unless equipment is very expensive. One reason insurers are now more relaxed is lower computer, printer and fax machine prices. It is now hard to spend over pounds 2,000, even on a top computer.

Constant price wars in computers and electronics are a headache for anyone working out the value of their possessions. This season's cutting- edge digital TV may well cost half as much next year - all the more true of computers. If the cost of replacing an item falls it is the insurer, not the householder, who benefits: it is only obliged to offer a replacement as good as the lost or stolen gadget, not what you paid. So it is worth checking replacement prices of older gear and adjusting your policy if need be. "An insurer will replace an item with something of a close specification," says Mr Jones. "It won't pay out pounds 1,500, even if that's the original cost."

n Contacts: Tolson Messenger, 0181-741 8361 (www.tolsonmessenger.co.uk); Norwich Union, 0800 888222 (www.norwichunion.co.uk); Royal and SunAlliance, 0800 300660 (www.royalsunalliance.co.uk); CGU, 0800 121 004 (www.cgu-direct.co.uk).