When planning to take an insurance policy, individuals need to know the value of the property being insured in order not to under insure or take a cover that is not appropriate for them. Insurance companies will ask you the total value of your home and the valuables in there. They do so to help you get the right cover for you while ensuring that you are not paying for what you do not need. While it is true that many people have ended up guessing the value of their contents, this isn’t the best thing to do. This can cost you, especially if you happen to undervalue the amount of your property.
But is it easy for an average homeowner to estimate the value of a home plus the contents? It is certainly not easy! Chances are you are likely to get an inaccurate figure, which could end up messing you in the future. For this reason, it is wise to hire an expert in insurance valuations to help you figure out the value of your property.
Estimate the value of your home contents
As already alluded to, the best way of estimating the value of the contents is to start by preparing a list of the items while allocating them the correct value. Doing this room-after-room will ensure that nothing is left unaccounted. You can also group the items per category, for instance, appliances, furniture, kitchenware etc. When you do this accurately, you will have a correct value of your household and which will be used to obtain the sum insured.
Remember, for most contents, insurance covers will assume the value of a new item even if the item is old. This means that you cannot value your items based on their second-hand cost. However, only clothing is what is subject to wear and tear so they will not be insured for full replacement cost.
Ensure not to Underinsure
When you undervalue, you reduce the possible premiums and certainly lower the potential compensation in the event of a claim. Remember, the lower the sum insured the higher out-of-pocket you will need to have the item repaired or replacement fully. Insuring a property for less than their full amount might seem beneficial in the short-term but may turn out to be a major tragedy in the event of a claim.
Review the Value of Your Property Upon Renewal of the Cover
Do not be like many people who have fallen into the trap of thinking that there is no need to review your sum insured just because the items were valued correctly. Whether you did the valuation yourself or a professional valuer did it, it is wise to revalue your property since the value of items does not remain the same over a longer period. In some cases, your valuer may increase the value of your contents depending on the Retail Price Index or such other applicable method.
The solution to all the challenges around insurance valuations lies with professional valuation companies. Therefore, you should research a reputable firm to relieve you of the tough job at a small fee.
