It’s around this time of year that many people take the fresh-start approach and tackle the task of cleaning out items which are gathering dust around the house. After all, there’s nothing better than that feeling of newly spacious shelves and cupboards. If you’re taking the time to do a clear out, it’s also a great opportunity to review your contents insurance to ensure it’s up to date and covers your possessions. Underinsurance is common when it comes to contents insurance, which is why we’re talking about the importance of keeping your contents insurance policy up to date.
The risk of underinsurance
Contents insurance is designed to protect you financially if your items are lost, damaged or stolen. Unfortunately, Australians are notorious for undervaluing their contents and the Understand Home Insurance Research Report from 2014 shows that nearly 1 in 4 people with contents insurance may not have cover for the most expensive items in their home. Underinsuring your contents means that if something goes wrong, such as a fire where your possessions are destroyed, you won’t have enough cover to replace all of your contents and you’ll have to use your own money.
Why should I review my contents regularly?
Simply put, things change. Consider how many items you purchase and how many items you get rid of each year and it’s easy to see why you might not have a great handle on how much everything is worth. A lot of people have a ‘set and forget’ mentality where they estimate the value of their contents and then don’t update it for years on end. This means that you may not be taking into consideration the increases in the value of your combined contents. A regular review of your items will also remind you to add more expensive items, such as jewellery or electronics, to your policy so you’re not caught out if you find yourself in a situation where you need to make a claim.
How do I accurately value my contents?
Try carrying out a room to room inventory where you estimate the replacement cost of each item in the room – you’ll be surprised at how quickly it adds up! Once you’ve done your inventory, compare your estimated cost to your contents insurance cover to ensure they match up. If not, give your insurer a call and increase (or decrease) your cover. Aim to value your contents at least once a year and specify with your insurer if you have special items which would be particularly expensive to replace. A good time to do an inventory is at renewal time, or any time you buy items of significant value. To make things easier, there are also easy to use CGU online calculators which make estimating the cost of your contents much simpler.
Remember, insuring your contents for the right amount can save you money down the track when it comes to claim time.