Have I insured my contents for less than they’re worth?

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Filling in contents insurance quotes is a chore.

How many of us really know the value or replacement cost of everything in our home? When you’re faced with a questionnaire asking you to put a value against your total goods, it’s easy to underestimate. Perhaps you think that’s not so bad. At least your premium will be lower if the value of your contents is understated, and fingers crossed that you won’t need to claim. But if you do need to claim, and you are underinsured, there is more than one consequence.

For example, you estimate the value of your total contents as £200,000 on your insurance form. Your house goes up in flames, and following a review by a loss adjuster, your contents are valued at £400,000. You’d imagine that you’d be entitled to a £200,000 pay out to replace everything. Losing 50% of the value of your total contents is not an easy pill to swallow. 

If you’ve insured your contents for less than they’re worth, most insurers will bring in what’s called an Average Clause. This reduces your pay out by the percentage that you’ve underinsured.

In the example above, the pay out would only be £100k. You underestimated the value of your contents by 50%. As a result, the value of the pay out is reduced by 50%. So even though you’ve been paying premiums for the £200k worth of contents, you only receive 50% of that.

So how do you make sure you’re not underinsured? Here are a few things that are often overlooked:

The three C’s - carpets, curtains and clothes - the first two are often missed as people think of them as part of the building’s insurance – they’re not. Don’t forget to include rugs too.

  • Clothes are almost always underestimated. Even if you’re not into labels or handbags, tally up what it would cost to replace the clothes, shoes and accessories you have.
  • Make sure you include any valuable jewellery as separate items on your policy.
  • Even if you don’t have chandeliers, light shades can be a costly item.
  • Dinner sets, crystal, gadgets and expensive cookware.

It’s easy to remember all the large, expensive items like furniture and technology, but everything else adds up too.

Will increasing the value of your contents insured send your premiums through the roof?

Not necessarily. Here’s an example of someone we helped recently.

We took on a high net-worth client that was underinsured by £990,000. Increasing his sums insured by almost £1 million cost just £150 more in premiums per annum with the provider we chose. This is an example of how insuring higher value contents to the correct amount doesn’t always increase your premiums comparatively. With his previous broker, that client would have been subject to an Average Clause and if they’d made a claim, would have lost a large amount of money.

If you think you could be underinsured and would like to get in touch, our team is on hand to find you the best deal and get you covered for 2023.


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