How To Avoid Being Under-insured With Home Contents Insurance

Many people take out home contents insurance for a set amount of cover and do not consider that they may be under insured. This is partly due to the fact that many insurance policies come with a set sum insured figure. For example, you may take out a basic policy which covers your contents up to a value of £30,000.

But it might be that your possessions actually come to more in total than that. The normal items that people want covered are the fridge, the computer and the TV. What many people do not realise is that it is all the smaller items that can take you over the set sum insured.

Therefore the requirement is to ensure that you have enough cover for the whole amount. This would be a total of rugs, mats, linen, tools, all those white goods, gems, rings etc.  You will soon see that all of these items soon add up and if you are under insured you may well be out of pocket.

This is all worth considering when looking at the potential damage or loss in a burglary. However, the larger totals can be reached if flooding or earth movements affect your home. Big events such as these can cause substantial losses, and who is to say you won’t be in this situation? If you suffered from a serious flood, you would need to pay out for some of these things if you were under insured in the first place.

Insurers also put limitations on individually valuable items that may be a ring or jewellery. The total may vary from policy to policy but can be around £1,5000 or £2,000. So as an example, if you have a £2,500 ring stolen, the most the insurer would pay to you for that item is the £1,500 limit. Again, this leaves you out of pocket.

This is where it pays you to specify any really valuable items on your contents insurance. The value of the individual items are then covered if you have a loss or theft of that item, to the full amount.

So how do you work out what an adequate figure is for insurance purposes? The best way is to go around the house and take the inventory of items in the home you want to insure. The precise number is not important, and you can estimate values, but the total is the best guess you can come up with. Adding up all of the items will give you the total needed.

It is worth mentioning that insurance companies will deduct a percentage off any items where wear & tear or depreciation in value applies. For instance, clothing that was bought last year will have a small amount of wear and tear, therefore if you make a claim for this clothing, a small amount will be deducted from the settlement amount.