A significant number of Britons could be putting themselves at financial risk, new research shows.

In a study carried out by Nationwide, a fifth (20 per cent) of homeowners admitted they do not have any form of buildings insurance. This led to the firm to claim that these consumers will find they are not protected should a flood, fire or storm damage their property. Meanwhile, of those who do have a policy about one in four are unaware what level of cover they have.

By not having adequate home insurance, or lacking cover altogether, people may find that the cost of replacing damaged goods and repairing property weighs down on their ability to service other demands on their finances. Such areas may include credit and store cards, household bills, loans and mortgage repayments.

Research from the financial services firm also revealed that 14 per cent of those questioned do not have home contents cover. Meanwhile, a fifth of respondents state that the total value of the goods in their house ranges between 10,000 pounds and 20,000 pounds. Nationwide observed that, in the event of damage to their home through a flood, fire or otherwise, “this adds up to a significant number of items that many would be unable to afford to replace straight away”. In addition, 17 per cent of people with contents insurance state that they do not know what goods are covered.

Commenting on the figures, Robin Bailey, insurance director for Nationwide, said: “It is surprising that so many people are prepared to take such a gamble on their homes and personal belongings when you consider how much time and money we all invest in our homes. You never know what is around the corner and for that reason it is vital that people are prepared by having adequate insurance.” He added that it was important people not only get a comprehensive policy but to make sure that it is also competitively-priced.

In addition, the study indicated that consumers from the north-east are the least likely to have buildings insurance, with more than a third (35 per cent) of people living in the region lacking such cover. An estimated 23 per cent of residents in London, meanwhile, do not have contents insurance. On the other hand, 96 and 92 per cent of those from Wales and the south-west of England respectively have a home contents policy. Around one in three people between the ages of 35 and 44 do not know what their policy provides, or even if they have cover at all.

Should a disaster in their house occur, such as a fire or flood damage, those concerned that a lack of insurance may put pressure on their finances to repair their property and replace items, a homeowner loan might prove to be of assistance. In taking out such a loan, borrowers may find that they are able to fund the cost of maintenance work effectively, while the financial assistance it provides may also help them to purchase an adequate insurance policy.

Applying for a homeowner loan could also help consumers to make improvements on their home and so boost its quality. Last year, Edward Simpson, head of public affairs at the Finance and Lending Association, claimed that more people are using such a loan to boost the value of their property as it proves to be a cheaper alternative to moving house.

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