Reassessing the sum insured can be very daunting especially in the case of large properties. Under the “buildings” section, you are insuring the actual structure of your home and this includes garages, any outbuildings, greenhouses, patios, terraces, swimming pools, driveways, walls, gates and hedges. It also includes fixtures and fittings which are all those things you would not take with you if you moved, such as bathrooms, doors, windows, tiling, air conditioners and generally speaking kitchens, although these may sometimes be included with contents.
Therefore, in calculating the value, you must cover the cost of rebuilding your home at current construction costs. The value of the land must not be included and you should not take the price you paid for your home or the current market value you expect if you were to sell it. Don’t forget to add an extra amount to cover demolition costs, architects and surveyor’s fees.
Under the “contents” section, you are insuring all the items in your home such as furniture, household appliances, carpets, linen, radios, videos, hi-fi equipment, cameras, home computers, sports equipment, cameras, jewellery, furs, clothing, personal money and other valuables. You can even extend to insure food in your freezer.
There are specific items that cannot be included, such as, amongst others, motor vehicles, boats, trees, bushes and plants, property used for business purposes. The policy will list these items. Check it carefully.
This contents section is generally covered by insurers on a New for Old basis and you must therefore calculate a Sum Insured that will provide you with enough money in the event of loss or damage to replace all the contents of your home as new. The insurer will pay you the full cost of repairing damaged articles or the cost of replacing them with equivalent new articles if they are stolen or destroyed.
If the cover is on an indemnity basis a deduction will be made from your claim payment to account for wear, tear and depreciation.
Certain items under the contents, such as works of art, jewellery or other valuables, may be subject to a limit. This is usually expressed as a proportion or percentage of the total Sum Insured under household contents. You may find these limits too low for your particular needs and your insurer may agree to raise the normal limits. In certain instances you will be required to get the item appraised and to present the valuation to the insurer.
Always read your policy carefully and look for the section about Claims Settlement Basis. Enquire what happens if you do not wish to rebuild the property or to replace any particular item as practices may vary between one insurer and another.
Remember that the buildings, contents and certain other sections of the home policy may be subject to an excess which is the part of the loss you will pay yourself. Make sure you know what excesses apply.