How to Avoid Underinsuring Your Household Contents

Home may be where the heart is, but it is also where you keep your belongings and some of your prized possessions. It is for this reason that you should choose the right home contents insurance.

You probably don’t want to even think about it, but can you imagine a night out without your favourite jewels? Or a night in without a TV?

Household contents insurance covers the cost of replacing or repairing damaged household items such as furniture, appliances and jewellery. It is always advisable to insure your possessions for their total replacement value - the cost of replacing lost or damaged items for new ones.

If you are only insured for an amount that is less than the replacement value, then you are underinsured. This means that in the event of a claim you will only receive a portion of the cost of replacing the lost or damaged items. For example, if the actual value of your household contents is R200,000 and you have cover for R100,000 (50% of the value), then your insurance company will only cover up to 50% of your loss in the event of a valid claim.

• Create an accurate household contents inventory. To avoid being underinsured, you need to ensure you have the correct value of all your items. The best way to do this is to create an inventory of all of your household contents with the replacement value of the item. The total replacement value of this entire list is the insurable value. Download Miway’s free, easy-to-use inventory/contents list template.
• Be careful not to undervalue or underinsure your contents. It can be tempting to do this in order to try to keep your premium down, but it can result in your insurance company paying less than the actual value of your goods when you have to claim.
• Specify items at their full replacement value and not their current value. When making a claim, your insurer may ask you to prove ownership and value of the items that you claim for. It is therefore advisable to keep receipts to ensure that the correct value is quoted and can be replaced accordingly. For inherited items such as jewellery, watches and antiques – acquire the right value by getting an appraisal from a reputable source.
• Remember to inform your insurer if your address changes. A change of address may affect your premium. Also remember to let your insurer know if you intend to build or renovate your property or if you upgrade or downgrade your security.

Check your cover for other terms and conditions that may affect your claim, or speak to your insurance provider if you’re unsure. For sentimental reasons, there are some things that cannot be replaced – but having the right contents cover will lessen the pain and cost of replacing everything else.