Elisha Bernard was enjoying a lunch-time chat with the next-door neighbours when she saw smoke billowing from her three-bedroom house. Knowing her two young sons were inside, the 35-year-old rushed back and, with the help of a neighbour, rescued the boys.
When Elisha's husband James arrived at the Bernards' semi in Enfield, Middlesex, firefighters were still quelling the electrical fire. The Bernards and their three children, aged 16, 14, and eight (pictured), were left surveying the blackened, smoke-damaged contents of their home. James Bernard contacted his home contents insurers, Abbey National, and told them exactly what had happened. Within a few days, the bank had sent a firm of loss adjusters, Cunningham and Lindsey, to inspect the damage.
This was followed by a visit from a clean-up company, whose staff took away damaged furniture, fittings and personal possessions to try to restore them. When the items came back, however, the Bernards were unimpressed. "Half our possessions were missing, and many of the rest hadn't been properly cleaned," says Mr Bernard.
Abbey paid for the family to stay in a nearby hotel for three weeks after the fire. They were then given alternative accommodation by their housing association for a further month, after which they could return to their somewhat diminished home.
A seven-month restoration period followed and by the end of it Abbey National had paid the Bernards the £20,000 their contents had been insured for. But the family still faced a considerable shortfall, and to top it all off, Mr Bernard had been made redundant.
"When I took out the policy four years ago, Abbey National said they needed to know our postcode and the number of bedrooms we had, so they could assess the value of our policy. They didn't go into details of our personal possessions, though I now know they were worth far more than we realised," he says.
"I believe we were underinsured by around £15,000, as we needed at least £35,000 to cover everything we had lost. Though we bought many new items, including bedlinen, clothes and kitchenware, we are a young family with many electronic items like televisions, computers, DVDs, videos and cameras, which all cost many thousands of pounds."
In the meantime, he used £8,000 of his redundancy money and savings to bring the house back to normality. "But I was still unemployed and we were desperately out of pocket, so I asked Abbey National to reconsider our case."
The Abbey said it had fulfilled its legal obligations and could do no more for the family as their policy had been paid in full. Their only recourse, said the bank, was to contact the Financial Services Ombudsman, a body that helps consumers solve disputes with financial firms.
Mr Bernard did just that and the ombudsman told Abbey to pay the family a further £1,700 compensation for "unclean and damaged items and distress", which it did.
The Bernards' story is a familiar but disturbing one. A recent survey by MoreTh>n, part of the Royal and SunAlliance insurance group, says the contents of the average home are worth about £42,000. "Many homes are insured for far less, with some policies as low as £15,000, as owners have no idea how much their contents are worth," says Steve Kingshott, MoreTh>n's home product manager.
"Home contents insurance is sold in two ways. Traditionally, the customer assesses how much their contents are worth. But new policies are often based on a home's postcode, the security of the area and the number of bedrooms, which gives customers very little say."
Hi-tech goods have added to the value of our home contents. Because of cases like the Bernards, MoreTh>n has now raised its standard contents cover from £40,000 to £60,000 "because we've suspected for some time that many homes are underinsured", adds Kingshott.
Homeowners and tenants, he says, should make regular inventories of their possessions. "Go round every room and tot up all the items including curtains and carpets and anything you've stored in the loft or cellar. Then write out a list together with the cost of each one and store it in a safe place."
Peter Stadden, technical services head of the British Insurance Brokers Association, says: "Valuing the contents of a three-bedroom home for £20,000 is very low. The insurers should have explained to Mr Bernard exactly how they arrived at that sum."
A spokesman for Abbey National says: "We did what was legally correct. It is in tenants' and homeowners' interests to check out all the contents of their homes and to make sure they know how much each of them is worth."
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