How to avoid undervaluing your personal possessions

Woman working on laptop on couch while drinking coffee

RACV Staff

Posted June 05, 2023

It can be difficult to keep track of the value of the items we buy and accumulate over time. This leads many of us to undervalue the personal possessions in our homes.

When purchasing home and contents insurance, it can be challenging to know how much to insure your personal possessions for. But the fact is that our personal possessions can be worth a lot when you add them all up, and values can fluctuate over time.

While many people do hold a home insurance policy, many households are underinsured. Following the 2019-2020 bushfires, ASIC estimated that 70 per cent of customers were underinsured by 20 per cent. Underinsurance can occur with any insurance, but it's particularly common when it comes to insuring our possessions.

By not having the right cover for your personal circumstances and not reviewing your home and contents insurance policy regularly, you might not be able to rebuild your home to its original condition or replace all of your possessions should you lose them all at once , such as in a flood or house fire.

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.

Woman listening to music on her phone with headphones in at a tram stop

Portable valuables such as phones might only be covered by your policy while they're in your home. Image: Getty. 

Save all your receipts

Keeping receipts every 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.

It can also be useful to write down items in each room, creating a home inventory, and including the purchase cost for each.

Consider your most treasured valuables

Depending on your policy, certain valuable items such as artworks, jewellery and collections might only be covered to a certain value by default. For some households this provides adequate cover, but for others, such as those who might have an extensive collection or many expensive items, you may need to review your policy to see if you can increase your coverage. In some cases, you may need to add additional cover to your policy to help ensure you are covered for the full value amount.

There may be limits to how much you can insure individual items for, so check your Product Disclosure Statement (PDS) before agreeing to a home insurance policy.

Cover your important possessions that leave the home

You might have insured your favourite watch for its full value as part of your insurance, but did you check to see if your policy covers the item once it leaves your property? It’s important to know whether personal possessions that you take outside the home – such as watches, jewellery, phones, laptops and other wearables – are covered by your policy if they’re damaged or stolen while not on your property.

Pick a home and contents insurance policy

Make sure you read the PDS for any insurance cover and compare home and contents insurance policies before deciding which policy best suits your needs. 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.

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 and Target Market Determinations. 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 Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.

^The RACV Home Buildings and Home Contents Calculators provide an indication of rebuilding or replacement costs only and in no way guarantees the amount RACV Insurance may agree to insure your home or contents for. It is your responsibility to check that this amount is enough to cover the rebuilding costs of your home or replacement costs of your home’s contents at today’s prices. Before you decide whether to buy or continue to hold RACV Home Insurance, you should calculate the actual replacement value of your home and contents and consider the information in the Product Disclosure Statement.