Determine value of household contents

Insurance for household contents

First published in City Press

How much cover do you need for household contents?

Many people feel that they can choose the amount of cover they want for their household contents. You may be happy with only R200,000 and the associated premium. It’s a misconception that’s unfortunately only properly understood when it comes time to make a claim.

You see, when you claim, the insurer will send out an assessor to assess the full value of all your household items. This includes things which you probably haven’t thought make a difference to your insurance. Curtains, perfumes, groceries, plastic containers and the mountain of items stored in the garage that you never use. And don’t forget about the pictures on the walls, books, DVD’s, toys and games.

The cover you take out should be sufficient to replace each and every item in your house with new equivalent ones. Even the inexpensive items or things which you don’t actually care about replacing.

Example of household contents

As a practical example, you are covered for R250,000 and have a break-in and claim for R60,000 worth of stolen items. At this point an assessor will come visit your place and take an inventory of all your contents as well as verify the stolen items as best as possible. Having proof of purchase or photos of items may prove very useful. If the assessed value is R300,000 it would mean that you are underinsured by 20% and your claim will thus be reduced by 20%. Even though you may claim for R60,000, you will only be paid R48,000.

The proper formula (for the exact figure) is as follows: Claim Amount multiplied by (Insured Amount divided by Assessed Amount)

R60,000 x (R250,000 / R300,000) = R50,000

Much frustration and most insurance-related complaints arise from not understanding that your household insurance must be based on all contents of your home. This along with the fact that insurers do not verify that you have sufficient cover until the time at which you claim.

A quick way to ensure that you have enough cover is to take an inventory of all items in your house, room by room. Include items stored in boxes under the bed or in the cupboard and remember your garden, garage and other storage areas. Think about the cost to buy new and similar items, from pillows to duvet covers, curtains and entertainment systems. This should give you a fair estimate of what your contents should be covered for.

Don’t be caught out when it’s too late. Take the correct cover now and rest assured that your claim will be processed fairly when it comes to the time.

Have a look at Naked Insure for household insurance (it’s a referral link but I actually use them myself so I fully recommend them).

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