Calculating the value of your personal belongings and the rebuild cost of your property is no easy task. However, working out an accurate amount is crucial for your home insurance policy. When you consider that the value of home contents, for example, will change every time you acquire or sell your big ticket items, regularly reviewing your coverage is important.
However, it’s clear that is many cases there is a serious underinsurance issue.
A SunLife survey suggests that 67% of homeowners do not know how much it would cost to rebuild their home, and a third believe it’s the same cost as the house value. This uncertainty in costing a rebuild can easily lead to under, or over insuring your home.
How to calculate your cost to rebuild
There are a number of factors to take into account when calculating your rebuild costs, including architect fees. The most accurate way to get a figure is to hire a surveyor to prepare a professional rebuilding cost assessment, however this comes at a cost of around £250.
You can also try the Association of British Insurers (ABI) and Building Cost Information Service’s (BCIS) rebuild cost calculator.
It is not just house rebuild costs that are often undervalued on an insurance policy. The ABI believes that a fifth of homes are also underinsuring their contents. This gap is greatest in wealthier households where in the most extreme circumstances, homeowners are only insuring a quarter of the worth of their possessions.
It’s easy to either guess a figure to value your home contents or simply never update your cover for several years.
However, it’s likely you’ve bought new, expensive technology or you may have family heirlooms or collections that have increased in value. If you don’t include these on your policy, then they aren’t insured.
Tips to value your personal belongings
Here are a few pointers to help you gather an accurate valuation of your home contents.
- Keep a note of any new personal assets you acquire throughout the year and add the value to your home insurance coverage. Similarly, keep a note of ones you no longer own and remove these.
- Walk through each room in your house and add up the value of your possessions, including fridges, furniture, jewellery, laptops and other technology, as well as the smaller, less expensive items that would equally need to be replaced in the event of a claim.
- Check your current policy and see where you think there are gaps.
- Take a look through receipts for an accurate idea of costs.
- Speak to your broker who will be able to help you identify gaps in your policy.
What many people do not realise is that underinsuring your home and contents could affect every claim you make. If you undervalue your belongings by 50%, your insurer will likely only pay 50% of any claim you make, even if it is for less than your total valuation. This will leave you to pick up the gap between the insurance pay out and the cost to replace your possessions.
If you need help with your home contents and buildings insurance, speak to an All Med Pro broker.
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