I am contemplating taking out contents insurance for the items in my house. I have been living there for more than 6 years and have accumulated a lot of expensive items. How do I work out how much insurance I need?
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Answer by Neha Sharma, Hillsdale 2036 NSW
- Most people take out inadequate insurance policies for their goods because they:
- either don’t know the value of the goods in their possession; or
- do not read or clearly understand the policy documents.
- You should first list all the goods in your possession, their purchase cost and their replacement cost based on today’s market prices.
- This is called an inventory.
- Ensure that you have sufficient details to identify the items such as:
- receipts, including purchase date;
- serial numbers;
- photos; or
- special ID numbers.
- By keeping an inventory you will be able to assess the value of your goods and how much you should insure them for. Generally the insurance should cover their replacement value.
- You will also be able to regularly update your policy to maintain appropriate level of contents insurance.
- Keep in mind that if you lose your household contents as a result of some unfortunate event such as a household fire your insurance company will only pay the level covered in your insurance policy.
- For example if your level of insurance is $15,000 but you lose $25,000 worth of goods your insurance company will only cover $15,000 worth of goods.