When you take out contents insurance or renew your policy, don’t underestimate the value of your possessions. Getting it wrong could be a costly mistake with serious consequences.
If you don’t check your home contents sum insured on a regular basis, then you could find that if you need to make a claim you are underinsured. If you’ve had the same level of cover in place for a few years, and acquired new things in that time, then the sum insured may no longer reflect the up-to-date value of all your possessions. If you don’t have the right level of cover in place and you need to make a claim, you could find that your insurance company reduces the value of your claim substantially, even if it’s for less than the total amount of your cover. If, for example, you have possessions worth £50,000 but only insure them for £25,000, and you make a claim for £10,000, your insurer may reduce the amount they pay out to £5,000 because you are underinsured.
Other types of policy
With ‘bedroom rated’ policies, the insurer works out the sum insured based on the number of bedrooms you have. These policies typically provide up to £50,000 of cover as standard. This is usually enough for most houses, but you’ll need to make sure it’s enough to cover your possessions. There are also ‘unlimited sum insured’ policies, which as the name suggests, cover all your contents without imposing a limit, meaning you don’t have to worry about being underinsured. We can help you find the right and most cost-effective policy for your needs.
Source: Intrinsic Quarterly Mortgages Q4 2018 ISSUE 10 “Gen up on your maths to save your cash.”