Most, though not all, contents sections of home insurance policies have a fixed limit on the amount of cover they provide. So before purchasing your home insurance, you need to check what the policy limit is, and be sure that the policy limit is enough to cover all of the items in your home, should disaster strike and they all had to be replaced.
Make an inventory and estimate the value of your contents
Make a list of the main items in each room in your home, and estimate how much they would cost to replace as new, not second hand. As well as large white goods and furniture, don’t forget your clothes, DVDs and books, or other things that may be relatively small by individual value but add up to a large amount in total.
If you have valuable items, make sure that the policy provides a high enough level of cover. You may need to note you have items over a specific value for them to be covered. If you have inherited some jewellery, or bought it a long time ago, it is a good idea to have it valued by a jeweller, both so that you know how much it is worth, and to prove to your insurer that you had it if you need to make a claim. Some insurers require a valuation to be done every 5 years as a condition of cover for jewellery and watches.
Try to save your inventory list electronically – in the event you have to make a claim, your list will be good supporting evidence that you did have all the items you are claiming for when you bought your insurance.
Underinsurance is insuring for a lower amount than the value of your contents. This isn’t a good idea.
Firstly, if you insure for a lower value than the contents in your home is worth you won’t be able to claim what you need if you had a major loss, for instance a big fire.
Secondly, if your insurer believes you have underinsured, they may make a deduction from your claim. So if you insured for 50% of the value of your contents, then the insurer may only pay out 50% of the value of your claim, even if you are claiming a much lower amount than the limit.
Review your inventory when you buy insurance again in 12 months time
Is your inventory still accurate? Are the new for old replacement values still right? Have you bought any expensive new items that should be added to your insurance?
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