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| Home
and Contents Insurance Guide |
The value
of your home and contents
 Correctly
valuing your home is an essential part of insurance. If you have to
make a claim and your home is severely underinsured you will have
to pay a great deal of money, even if it is only a partial claim.
There are a number of factors to take into account when sizing up
the value of your property and contents, including the cost of rebuilding
external features and policy limits on the value of individual items.
Underinsurance
Many people believe that when they take out home and contents insurance
to a certain amount, they will be fully covered up to that amount,
even if they are only making a partial claim on their property.
This is not the case if your assets are underinsured.
Let's say that someone has taken out $100,000 worth of insurance,
even though their home and contents are actually worth a combined
total of $200,000. On a dark and stormy night, their house is struck
by a freak bolt of lightning. The ensuing fire causes $40,000 worth
of damage.
It's a commonly held assumption that because this person has $100,000
of cover they will receive the full $40,000 compensation. In fact,
because this person's insurance only covers half the value of their
assets, their payout will be limited to $20,000.
In recent years, the boom in building and renovation has fuelled a
significant increase in building costs, and anyone who has not recently
reassessed the cost of rebuilding their home is probably underinsured.
Renovators who have updated and improved their homes without updating
their insurance are also at risk.
To ensure that you are not underinsured you need to accurately assess
the value of your home and its contents.
Estimating the value of your home Check the external measurements
of your home in metres. Multiply the length by the width to give you
the floor area in square metres. If your house has more than one level,
don't forget to add that as well.
By knowing the overall square meterage of your home, you can work
out how much it will cost to rebuild.
Ask a builder or architect to provide an assessment of the cost per
square metre of rebuilding your home. If you don't know any, contact
your local Housing Industry Association (HIA) office for some names
of builders in your area, or check out homesite's building professional
listings.
Multiply the area of your home in square metres by the building cost
per square metre. This will give you your home replacement estimate.
Take note of any special features of your home and property.
Estimate how much it would cost you to replace items like external
blinds, outbuildings, garages and fences. Add together these costs
to get the other structural features estimate.
Ask a builder or architect to help you estimate how much it would
cost to have debris removed and new plans drawn up and approved if
your house was destroyed.
Add all these costs together to find the total amount for which you
should insure your home on a replacement basis.
Estimating the value of your contents
List the contents of every room. Make a note of any serial numbers
or identity marks. For unusual items, it's often a good idea to take
photographs or a video to help with their description. Estimate the
value of each item and include it in the checklist. When you add it
all up you will have a guide to the total amount of contents cover
you need.
For furniture and major appliances such as your television, video
recorder, vacuum cleaner and so on, check how much a similar one would
cost if you had to buy it brand new you can find this out by checking
advertisements or stores.
Some things may not be fully covered by contents insurance: for example,
jewellery, paintings, coin and stamp collections. If they aren't covered,
you may choose to take out a separate insurance policy for them.
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