How to calculate the value of your home contents and avoid underinsurance

Calculate home contents at today’s replacement cost: the amount needed to replace eligible belongings with new items of a similar type and quality. Build a room-by-room inventory, include easily forgotten possessions, obtain valuations for high-value items and update the total after major purchases or price increases.

Underinsurance occurs when the insured amount is lower than the true replacement value of the contents. If an average clause applies, a claim may be reduced in the same proportion as the underinsurance even when only part of the contents is damaged.

For example, if contents worth R600,000 are insured for R300,000, the home is insured for only half its replacement value. Subject to the policy, an otherwise valid partial claim may therefore be reduced proportionally, less the excess. This example is illustrative; actual settlements follow the wording.

·       Walk through every room, garage, storeroom and outdoor living area.

·       List furniture, appliances, electronics, clothing, linen, kitchenware, tools, books, décor, sports equipment and other belongings.

·       Use current retail replacement prices, not what the items originally cost or their second-hand value.

·       Record quantities for groups such as clothing, crockery and bedding.

·       Obtain current professional valuations for jewellery, art or collectibles where required.

·       Add the room totals and retain a reasonable allowance for small forgotten items.

A spreadsheet, home-inventory app, photos and short videos can make the review easier. Store copies securely away from the home or in protected cloud storage.

Common omissions include clothing for the whole household, curtains, rugs, cookware, small appliances, tools, garden and leisure equipment, children’s items, books, stored belongings and recently purchased electronics.

Portable items such as phones, laptops, cameras and jewellery may require separate movables or all-risk cover when taken outside the home. Standard home contents cover may not fully protect them away from the insured address.

·       After moving or renovating

·       After buying furniture, appliances or electronics

·       After receiving jewellery, art or inherited items

·       When replacement prices rise materially

·       When household members move in or out

·       At every annual policy review

Tell the insurer about material changes rather than waiting for renewal. Keep receipts, serial numbers, photographs and valuation certificates where available.

Confirm how the policy defines replacement value and applies the average clause. Check single-item limits, security requirements, specified-item rules, excesses and exclusions. The insured amount should reflect all eligible contents, while valuable or portable items may need individual specification.

Miway’s home insurance information and underinsurance guide provide a useful starting point for reviewing household cover.

A reliable contents value comes from an inventory, not a guess. Price every room at current replacement cost, document high-value possessions and refresh the total regularly. The few hours spent recording belongings can reduce uncertainty when a loss occurs.