How To Make Sure Your House and Contents Are Adequately Insured
When it comes to taking out house and contents insurance, one of the main questions that an insurer will ask is how much you want your contents insured for. This can be a tricky question to answer. After all, you’ve probably accumulated your furniture, electrical equipment, artwork, clothing, and jewellery (not to mention everything else) over years and years. This can make estimating its worth almost impossible.
Luckily, there are a few things to keep in mind to ensure that your house and contents are adequately insured.
What is Underinsurance?
Underinsurance is a lot more common than you think—it’s when you don’t have enough insurance coverage for your house and contents.
If you’re underinsured and need to make an insurance claim, there will be a gap between what your insurance covers and the final billed amount. You’ll be left out of pocket for the cost additional repairs and replaces that are over and above the amount for which you’re insured.
Reasons for Underinsurance
There are two key reasons why underinsurance occurs:
- The set-and-forget approach. Most home owners purchase an insurance policy and pay the renewals each year, but fail to consider whether the coverage is still adequate. For instance, have you bought a brand a new 75 inch TV? Or maybe invested $10,000 in your favourite piece of artwork? Did you get engaged and now sport a two carat diamond ring? If you answered ‘yes’ to any of these questions, did you update your house and contents insurance to cover your new belongings?
- Difficulty estimating rebuilding costs. Oftentimes, insurance companies ask consumers to estimate how much it would cost to rebuild their home or replace its contents. This can be almost impossible to estimate if you’re not builder, or without undertaking a serious stocktake of your belongings. It’s so important not to just take a shot in the dark and guess these figures—they must be based on proper, specific calculations.
Tips to Ensure Your House and Contents Insurance is Right
Given the problems of underinsurance, it’s important to make sure you have the right amount of coverage. We have a few quick tips and tricks to help.
Calculate the Value of Your Items with Clear Records
While this might seem tedious, or a bit over-the-top, it’s important to begin by creating an inventory of all your belongings. List out every item, with an estimated cost of replacement. If you have the records available, file this inventory away along with receipts and warranties.
Take Photos of Valuable Items
If you have specific items that are valuable to you (whether finically or sentimentally), take photos of them. This might include pieces of jewellery or family heirlooms.
Check Your Accidental Damage Coverage
Make sure you know exactly whether you’re covered for accidental damage, and for what. Some insurers don’t provide accidental coverage for things like knocking a TV off its stand, or kicking a football through a window.
Understand Your Exclusions
House and contents insurance give your protection and peace of mind in the wake of specific events, including (but not necessarily limited to) theft, vandalism, storms and fire. But, some events, like floods, can be excluded by insurers. It’s worth checking and understanding what these events are.
Insurance policies can include specific limits on coverage amounts for particular items. For instance, your insurance might state that $2,000 is the most that you can claim for your electrical appliances. This means that if your $5,000 75 inch TV is stolen, you could be $3,000 out of pocket.
Adjust Your Excess
Do you know what the excess on your house and contents insurance is? If not, double check this. And then think about whether or not it’s worth increasing your increase. By increasing your excess, you can usually bring the cost of your premium. Deciding on whether to have a low excess or a low premium depends upon a whole range of factors, so you’ll need to take your personal situation into account.
Compare Home Insurance Policies
It’s a good idea to not only review your cover regularly to make sure it is enough to suit your needs, but to compare it with others on the market.
Keep in mind that the cheapest policy may not always provide the cover you require, so it is a good idea to read the product disclosure statement (PDS) of any product and compare policies before making a decision.
The most important piece of mind for you is to compare home insurance policies and cover regularly, and if you purchase anything new to contact your provider.