How to avoid undervaluing your personal possessions

mother and baby at kitchen on the phone

Nina Hendy

Posted September 06, 2021

It can be difficult to keep track of the value of the items we buy. This leads many of us to undervalue our personal possessions.  

The Australian Bureau of Statistics found that the average Australian home has $61,000 worth of content. That’s a lot to lose, particularly if it was lost all at once, like in a house fire. 

When purchasing insurance, it can be challenging to know how much to insure your possessions for. But the fact is that our personal possessions can be worth a lot when you add them all up. While many people do hold an insurance policy, the vast majority are underinsured. Underinsurance can occur with any insurance, but it's particularly common when it comes to ensuring our possessions. 

According to the Insurance Council of Australia, it’s a big issue. They found that more than four in five Australian homeowners and renters (83 per cent) are underinsured for their home and contents, and seven per cent of homeowners and 63 per cent of renters don’t have contents insurance.

A third of us risk underinsurance by not updating our contents policy to cover new possessions.  

How to tell if you are underinsured

Why are we underinsured? 

Research suggests that many Australians don’t have adequate insurance. The fact is that Australians risk underinsurance by consistently selecting their policy based on low cost rather than adequate coverage. It might sound a little cheaper to opt for less insurance cover to reduce the costs, the fact is that you risk not having enough cover when you need it most. 

Adding it up

The best way to avoid underinsurance is to calculate the amount of insurance you need 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. 

Go room to room

When it comes to estimating the replacement cost of contents, online calculators can be a great way to record not what you paid for the item but how much it would cost to replace them. It can be useful to write down items in each room, including the purchase cost for each. 

While it’s easy to remember to include the more expensive items, like artwork left to you in a will, jewellery, technology, or a musical instrument, you mustn't overlook everyday items, such as cutlery, sheets and towels, clothing and footwear. 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 or to add big-ticket items, such as a piano, new furniture or a big-screen television.

Save all your receipts 

Keeping receipts each time you buy something new can be a great way to record your items' worth. There are plenty of digital tools out there that enable you to take a photo of the receipt and enter it into a running record of expenses. You will be so grateful that you’ve done this down the track. 


woman on computer

Track your receipts and expenses to keep across how much your contents are worth. Image: Getty. 

Picking a policy

The reason for insurance is to outsource your risk to a third-party provider – your insurance company. It provides a level of financial protection.

Make sure you read the product disclosure statement (PDS) for any insurance cover and compare policies before deciding which policy best suits your needs. 

Bear in mind that the cheapest policy may not provide you with the best cover. 

It’s also important to understand any natural risks your possessions may be exposed to. For example, if you live in a flood zone area, be sure to check your policy to see if you are covered for those events. This sort of information can be found with your local council. 

Contents insurance 

Your insurance company will usually offer you two types of home and contents insurance policies:

Total replacement 

This means the insurer will pay for the cost of rebuilding your home to the standard it was before the event that you claimed for. You just need to pay the excess. Your insurer will want to assess the damage or loss when these claims are made and will advise you on what your policy covers you for. 

Sum insured

This means the insurer will pay up to a certain amount you have agreed to in your policy. 

What if you’re underinsured?

If this happens and your policy doesn't cover your items, you will be forced to dip into your savings, increase your existing home loan, or borrow the funds required from a lender. 

None of these options are particularly appealing, so make sure you adequately insure your items in the first place. 


Cover for the items that make your house a home.
Get a quote with RACV Home Contents Insurance →

The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement. For copies, visit As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Product(s) issued by Insurance Manufacturers of Australia ABN 93 004 208 084 AFS Licence No. 227678

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