| |
Making sure that you are
insured for the right amount depends in part
on which of the two types of policy you choose.
Sum-insured policies base what you would pay
for your insurance on what it would cost you
to replace all your possessions (for new-for-old
cover) or what they are currently worth (for
indemnity cover). This figure is the ‘sum
insured’. Unless you have your insurer’s
specific agreement to exclude some of your
possessions, the sum insured should include
everything you own. It is your responsibility
to get the sum insured right. If the figure
is too low, it will not reflect the true replacement
values of your belongings and you will be
under-insured – meaning that any claims
you make will not be paid in full. If it is
too high, you will be over-insured and paying
above the odds for your policy: over-valuing
your possessions does not mean that you will
be able to claim for higher-specification
items as the insurer will verify their cost
before paying out.
Bedroom-rated policies base what you pay for
your insurance on the number of bedrooms in
your house. This sort of insurance may not
be available if your house has more than certain
number of bedrooms (including those that you
do not use as bedrooms – a sewing room
at the top of the house, for example).
• If a bedroom-rated
policy offers unlimited cover, you do not
need to know the total value of your possessions
and there is no risk of you being under-insured.
However, you may still need to calculate the
replacement cost of high-risk items.
• If a bedroom-rated policy puts a limit
on the amount you are insured for –
e.g. £40,000 – you will still
need to work out the total value of your possessions
to see whether the policy’s limit will
provide sufficient cover.
Valuing your possessions
Guarding against under-insurance
of your belongings is time-consuming and tedious,
but essential if you want to ensure that any
claims you make are paid in full. Even if
you have decided to buy a bedroom-rated policy
with unlimited cover, you will still need
to give the insurer a figure for the cost
of replacing high-risk items.
High-risk items
The following advice relates to new-for-old
cover. The checklist below lists things that
are typically considered to be high-risk or
high-value items and are usually subject to
limits on what will be paid out in the event
of a claim. To work out the total value of
all your high-risk items, fill in what it
would cost to buy replacements for everything
applicable. If you do not keep abreast of
the prices of electrical goods, find out up-to-date
prices for the nearest equivalent of each
item on your list, either from advertisements
or by going round the shops.
Checklist for high-risk
items
Item Cost for replacing as new (£)
Television(s)
Video recorder
Tuner
Amplifier
Speakers
Radio(s)
Portable tape/CD player(s)
Personal stereo
Personal CD player
Camcorder
Camera (including separate lenses, flash guns)
Binoculars
Computer
Computer printer
Fax machine
Clocks
Watches
Jewellery
Other items made of precious metal
Fur coats
Valuable pictures
Works of art
Curios and collections (e.g. stamps, coins)
Antiques
Expensive sports equipment (e.g. golf clubs,
skis)
Other valuable items
Total
It is likely that if you
ever have to claim for any high-risk items,
your insurer will want to see proof that you
owned the items before agreeing to pay for
a replacement. It could be worth tracking
down the receipts for everything you list
for or, if you threw the receipts away, taking
a photograph and digging out some other form
of proof (e.g. a repair bill or any document
giving details of the item plus your name
and address). You should also note down details
of the make, model and serial numbers of items
such as videos and cameras. See Home Security
Getting a valuation
For items that you cannot
replace as new – antiques and valuable
paintings, for example – you may be
asked to supply a professional valuation.
Contact the Incorporated Society of Valuers
and Auctioneers for a list of valuers who
will undertake insurance valuations. It is
also a good idea to keep photographs (taken
from different aspects) of distinctive valuable
items. A valuation for insurance purposes
represents what you would have to pay to replace
lost or stolen items. With antiques, this
normally means replacement with another item
of a similar style and in a similar condition.
Because the insurance value is what you would
have to pay to replace your goods, rather
than what you could sell them for, the amount
will be higher than a sale valuation to take
account of dealer margins. For easy-to-replace
antiques, collectables and fine art items
the insurance valuation is generally at least
double the sale value. For rarer or more intricate
items, it could be two to four times as much
as the sale valuation.
The rest of your belongings
Once you have valued your high-risk belongings,
you have a choice: you can give up on the
valuing process and buy a bedroom-rated policy
with unlimited cover, or you can guess at
the value of your possessions and risk being
under-insured or you can go through every
room in your home – not forgetting the
loft, cellar, garage and garden shed –
making a list of all your other belongings
(including furniture, carpets, rugs, curtains,
lamps, ornaments, plants, books, videos, CDs,
LPs, tools kitchen equipment, glass-ware,
china, cutlery, iron, ironing board and so
on) in order to work out what it would cost
to replace them; you should do this the same
way as for high-risk items. The Association
of British Insurers provides a free information
sheet entitled Home Contents Insurance which
includes a room-by-room checklist.
Indemnity cover
Even if you buy new-for-old cover, your clothes
and household linen – towels, sheets
and so on – will always be covered on
an indemnity basis which means that, as well
as finding out about their replacement value,
you need to make a deduction for wear and
tear using the following calculation:
Current replacement value x current age of
item (in years)
Estimated total life
The sum insured
With a sum-insured policy, to arrive at the
total amount you should be insured for add
together the total of your high-risk items
and the total for the rest of your belongings
(after making a deduction for wear and tear
for clothes and linen, as above) and round
this figure up to the nearest thousand pounds.
You must insure all your contents for the
right amount – if the total sum is too
low, whatever amount the insurer pays out
will be scaled down proportionately.
|
|
