4 Top Tips for Calculating Home Contents Value for Insurance

Do you have adequate Home Contents Insurance?

When it comes to insuring home contents most people do not know how to calculate the value they should place on their possessions.  It is not until you have experienced loss of contents, especially total loss, that you realise the importance of having your home contents insured adequately.  Total loss is an extremely stressful time, however having your home contents insured for the correct value can provide peace of mind.

For Home contents insurance, the amount insured should be based on replacement value of the contents and not the market value of the contents.

If you lose an item of contents either by theft or damage or total loss (i.e. a weather event destroys all of the contents of your house), the insurance company will generally replace the item for you as opposed to paying cash to you.

For example:

• you estimated the market value of your home contents at $30,000
• a weather event destroys your home, including all contents
• you have no idea as to what contents you lost, as you had no inventory list prepared
• you start adding up all of the contents you think you have lost
• you get quotes for all of the contents you think you have lost
• the quotes add up to a total of $40,000 to replace all of the contents you have lost
• insurance company only pays you $30,000 to replace all of the contents you lost
• you have to come up with the other $10,000 from your own pocket to replace all of the contents you have lost

The first and primary problem you have is that you do not know what contents you have, and therefore you cannot estimate the replacement value.

The second issue you have is that if you had completed a list of your contents, and it was sitting in your desktop drawer at home, it no longer exists, as it was destroyed during the weather event.

Here are 4 top tips for keeping a record of all of your home contents, and estimating its replacement value:

1. Take a photo of all of the contents of each room in your house

     These should include clothing, jewellery, electronic equipment, furniture basically every item of contents in your home  

TIP

For multiple items (e.g. clothing, kitchen utensils), lay the contents out on your bed or table, and take a photo of all items you can always identify each item later, if you need to

2. Upload your photos to a cloud account

     There are several different accounts you could use such as icloud, one drive, dropbox etc.

3. Estimate the replacement value of each item

    Using your photos will enable you to estimate the replacement value of each item

4. Upload your list of estimated values to your cloud account

    Once you have completed your list, upload to your cloud account

McKinnon Financial Services can provide a detailed home contents valuation estimate calculator.  If you would like a copy CONTACT US and a copy can be emailed to you.