Insurance World

You’ve probably got contents insurance for your belongings but are you aware just how easy it is to fall behind in calculating the value of them?

What do you imagine the average contents of a family home are worth - Ј25,000 or Ј30,000? In fact this figure, for a typical home, is estimated to be over Ј45,000. Apart from your “moveable items” of carpets, furniture, curtains, it’s probable that electrical goods purchased over the last few years explain the sudden rise. It’s not unusual to have three or four mobile phones, a couple of computers, possibly also a laptop. Then there are the TV’s. Apart form the large family wide screen digital HD ready, singing and dancing set, there’s probably a another one in the kitchen and two or three others in the bedrooms, not to mention DVD and video recorders. Probably the children have iPods, gameboys and whatever else is “in” at present. Don’t forget your CD collection – Norwich Union values these at Ј10 each and DVD’s.

Apart from the risk of damage, all the above items are very appealing to the thief, being easy to handle and finding a ready market. Don’t forget the garden, the mowers and garden machinery, contents of the shed and garage, garden furniture and even your tubs and hanging baskets. The value of plants can add up too!

Should you need to make a claim, it’s important that you’re not under insured. If the insurance company judges that you don’t have adequate insurance, the claim will not be fully paid. This means that if you have insured your contents for, say, Ј20,000 and your insurance company considers there would be a value of Ј30,000 to replace them, then there would be a shortfall of Ј10,000.

Insurers handle things in different ways. For example Norwich Union Direct, one of the major insurers, will pay out up to the amount for which you’re covered. It’s left up to you to fund the difference. More Than tells us that their policy on underinsured claims is to reduce them by up to 20%. In fact More

Than are taking action to ensure that clients are more up to date with their cover and so have recently increased the this for all their clients, by 25%.

These increases will apply on the clients’ next renewal dates. No doubt more insurance companies will look at following suit soon.

Whilst you’re thinking of re-assessment, maybe it’s time to check the current figures on your buildings insurance. As well as the house, garage and outbuildings, you may have fixed items such as lighting, hot tubs and permanent garden features. These are covered by your buildings insurance, not your contents. Your insurer will normally work out a quotation based on the number of bedrooms, etc., and your postcode. The insurable figure will be the cost demolition and clearing of the site and re-building your home on the present site, of course.

To help you re-consider the value of your belongings and for additional advice there’s a handy checklist for home owners on the Association of British Insurers, www.abi.org.uk

There are a large number of insurance companies handling both contents and building insurance and, as always, it pays to shop around.

Just because you have insurance doesn’t mean it will be enough to protect your hard-earned assets should the inevitable happen. There are countless situations - like a home fire, a car wreck with injuries, or someone getting hurt on your property (to name a few) - where your level of home or auto insurance could make or break your financial future.

Here are five commonly made insurance mistakes and how to avoid them, according to Charles Valinotti, General Casualty Insurance Companies’ assistant vice president, and John Blodnick, Unigard Insurance Group’s vice president.

1. Buying the cheapest policy out there. You might save a buck by getting the minimum amount of insurance you legally can. But if the cost of an accident ends up being more than your policy covers, you’re still responsible for paying the rest. Other parties could go after you and your assets.

2. Forgetting to pay your bills. There are plenty of understandable reasons why you might not pay your bill on time. But be warned that if you don’t pay your bill, your insurance company isn’t obligated to cover you - period. To avoid this, set up automatic payments through your bank or insurer or escrow for your home insurance. Otherwise, move your insurance bill to the top of the stack.

3. Assuming your stuff is covered. Policies limit how much coverage they provide for certain higher value items. Have a diamond wedding ring? Antique silverware? Customized wheels on your truck? Nice stereo system? Expensive guitar? These could fall outside the realm of a typical home or auto policy’s coverage. It’s easy to rectify this problem by “scheduling” or adding extra coverage with an endorsement, which gives you higher limits on certain items.

4. Not bothering with an umbrella liability policy. Umbrellas are only for rich people, right? “No, umbrellas are for every Tom, Dick and Harry. Think about your annual combined household income. Isn’t that worth protecting?” Valinotti said.

What if someone got hurt during your child’s next birthday party or your upcoming backyard barbecue? You can purchase an umbrella for as little as $100 for $1 million of extra coverage, depending on the policy and which area of the country you live in. “It’s a risk not to have an umbrella, like playing the lottery with your financial future,” Valinotti said.

5. Keeping your agent in the dark. If you’ve recently built an addition on your home or made a big purchase (see number three), talk to your agent. Without extra coverage, you could be underinsured. Or if you get your bill and decide you want less coverage, talk to your agent. Policy changes may or may not be a good idea, but it’s your insurance agent’s job to advise you.

“Today, people often feel that an agent is not necessary,” Blodnick said. “However, considering the complexity of the products you are buying in an ever-more complex world, the expertise of a professional agent can be extremely important.”

For example, at a glance you may think, “I don’t need ‘other than collision’ coverage on my car.” But your agent would tell you that’s what covers you if your vehicle is stolen, catches fire, is damaged by hail or wind (such as a tornado), or if you hit a deer.

Your agent can also suggest ways to save money on insurance without risking your financial security – such as taking a driver safety class, getting a home security system, taking down the trampoline your kids never use, increasing your deductible, or taking advantage of multi-policy or good student discounts.

Contact your local independent insurance agent for a review of your personal insurance policies. - ARA