How to correctly calculate your contents cover

Contents insurance provides you with the peace of mind that if your valuable possessions are damaged, lost or stolen, you’ll be able to replace them. But how do you work out how much you need to insure everything for? Your contents are made up of hundreds of items, often purchased or gifted over many years, and it’s impossible to remember what you paid for everything.

Many people resort to simply guessing the value of their belongings. Some insurers suggest the rule of thumb is 40% of your house’s sum insured. For example, if your house is insured for $400,000 then your contents cover would be $160,000. However, this is a ‘ballpark’ estimate and may not suit your individual situation, leaving you under (or over) insured.

A more comprehensive way to work out the value of your contents is to use a spreadsheet like this one, supplied by AMP. It provides you with a list of common household items and a likely average and above average value for each. It’s helpful to do a room-by-room walkthrough as you complete it, making notes and adding any items that don’t appear on the spreadsheet. Once you’ve listed all your property, add up the value totals to calculate your sum insured.

It’s important to note that the amounts in the spreadsheet are general figures, designed as a rough guide. If you want to get a more accurate value for any item, looking online is a great way to assess the exact cost. PriceSpy will show you the current price of items across a range of retailers.

It’s important to pay particular attention to items that people often underestimate the value of, such as clothing, technology and jewellery. If you have an extensive wardrobe or large collection of shoes, it may pay to review it item-by-item to see if it exceeds the suggested value on the spreadsheet.

It’s also important to be aware of the maximum claimable amounts your contents policy offers. Items such as bikes, sports equipment, cameras, jewellery, art, coins and stamps are often capped in value unless you specify them on your policy. You may be required to supply a receipt or a valuation to ensure your item is covered in full.

Once you’ve settled on a total sum insured, be sure to review it regularly. Rising prices may mean that your cover is not sufficient in years to come. If you make a big-ticket purchase, check your policy to see if you need to list it as a specified item, and to work out whether your sum insured needs to be increased accordingly.

Call us at Certus if you would like to discuss or review your contents cover with one of our experienced brokers.