How to prevent being underinsured and financial loss
Understand why your personal possessions might be underinsured
Most people don’t deliberately underinsure their personal possessions, only realising the true value of replacing the contents of their home when the unexpected happens, such as a bushfire or flood.
You may also not be considering the cost of replacing an item as new. For example, your treasured record collection might have only cost you a certain amount 20 years ago, but replacing every single record now might cost you more, or the collection itself may have appreciated in value.
The same applies to items which you might have been gifted or inherited. There’s no replacing the sentimental value of an item, but correctly insuring it can help ease some of the financial burden.
Check today's prices for items
The best way to avoid underinsurance is to calculate the amount of insurance you need for your personal possessions and reassess this each year. For contents, consider the cost of replacement for all of your assets with new products. Even if you purchased some items on sale, the replacement cost may be higher than what your assets are worth today.
Be sure to review how much you’re covered for annually. Busy lives mean many of us simply renew our insurance for the same or similar amount every year, despite the fact we might now own additional possessions, our possessions might have appreciated, or the cost of replacing a certain product might have increased due to factors such as supply shortages and inflation.
Go room to room in your home - don't forget the garage
While it’s easy to remember to take out additional cover for more expensive items around your home, like artwork, jewellery, technology, or a musical instrument, you must not overlook everyday items, such as cutlery, sheets and towels, clothing and footwear when it comes to estimating the replacement cost of contents. These ordinary items can really add up if you lose them all at once in an unexpected event.
Also, make sure you list things in storage and your garage. RACV’s home contents calculator^ can help cut down some of the legwork. It is important to review your policy each year and make sure your contents insurance provides adequate coverage for big-ticket items, such as a piano, new furniture or a big-screen television.