A lot of insurance companies will “estimate” how much your belongings are worth based only on your location, property type, and age. These may seem helpful and they’re probably in the right ballpark, but tend to be less accurate than you might have hoped. As a result, research* has shown that people’s estimates are on average 45% lower than the true value of their contents!
This is pretty serious because being underinsured can be a real problem should you have to make a claim. It’s risky to be underinsured because of something called the ‘averages clause’ – you may not have heard of it before, but it’s pretty important. The way it works is that your payout reflects how accurate your valuation was. For example, if you insured your contents for £25,000, but actually your contents were worth £50,000, then your insurer would only pay you half the amount you claimed for. This works for all claims, no matter how big! If your £500 phone was stolen and you claimed for it, you’d only get £250 towards buying a new one.
Crazy stuff, right?! Fear not, though, because it’s easy to get around this. If you’re up for renewal or don’t have contents insurance yet, just make sure that you’re as accurate as possible with your valuation. Contrary to popular belief, having a high cover level doesn’t increase your premium by a great deal, and could end up saving you a lot of money down the road. If you’re already covered, it shouldn’t cost too much to add to your cover level, although you may need to sit through a fairly long phone-call depending on who your insurer is.
What should I cover and how do I know how much it’s worth?
Before you proceed, check out our full-blown contents insurance guide to get more information what it is and what you should keep in mind while shopping for one.
You need to make sure you know what’s covered by your contents insurance and what should be covered by your landlord’s buildings insurance. Everything that didn’t come with the house is your contents – from your crockery to your clothes to your laptop. Things which people often forget about when valuing their belongings include freestanding fridges, cabinets, clothes, curtains and soft furnishings, like carpets and rugs, etc. Anything that is a fixture or fitting, such as flooring or the built-in-oven is part of the building and so your landlord’s responsibility.
Your next step is valuing your items, which can be tough. Obviously, you have a rough idea of how much things cost when you bought them, but what if they’ve been damaged? What if you inherited something from a relative, or bought it from a charity shop? The majority of insurance policies will ensure your belongings new for old, meaning you should value everything as the cost of buying it again new. If you have any antiques or items which are difficult to replace then you should enter its current value – you may need to get an expert valuation to do this.
If any of your belongings are extremely valuable, for example, a diamond ring or musical instrument, then in order for it to be covered on your policy you will have to declare it specifically. You will normally be asked if you have any high-value items.
Let’s crunch some numbers
For starters, you should walk around your home and make a detailed list of everything you own – furniture, appliances, clothes, decorations. Anything that’s remotely valuable should be on your list.
Next, you have a few options – either you go old school and just use a pen, paper and your calculator, or you can use one of the many available contents calculators online. The one from Urban Jungle works great and will probably save you 20 minutes.
Your contents insurance goes much further than just your belongings, though, which is another reason to be more generous with your valuation. Imagine if the worst happened, and you had to move out of your home for a while – not only would you be facing replacing a lot of your possessions, but you’d have alternative accommodation to pay for.
Another feature included with some contents policies is Tenants Liability Insurance. This essentially protects your security deposit if you damage anything belonging to your landlord, such as their furniture, fixtures and fittings (e.g. curtains and carpets). You would think that that’s what the deposit is for, however, the liability insurance can actually save you money on larger penalty charges. It costs less than £50 per year and can save you your £1000 deposit.
So, you’ve figured out how much your stuff is worth at the moment. But what if you finally get round to buying that new TV or the designer sunglasses you had your eye on? Chances are you won’t remember to update your cover level every time you buy something new, so we recommend that you have a little ‘buffer’ to make sure you’re never underinsured.
Most policies last a year, and in that time a person can buy lots of things – specifically phones and other expensive electronics. Make sure to account for those, or you may end up underinsured halfway through your policy.