From groceries to electricity, the cost of everyday essentials continues to climb. But one area you may have overlooked is the value of items you already own.

WORDS: JEREMY ROCHOW

Shockingly, the Insurance Council of Australia has found that 83 per cent of households believe they may be underinsured. That stat might have you asking, “how does that happen?”

It can happen quicker than you think. Many homeowners take out home and contents insurance when they first purchase a property, estimating the value of their home and belongings at the time to determine their level of coverage (this is called the sum insured in insurance lingo). But after that initial setup, it’s easy to forget about updating the policy.

Over time, renovations, upgrades, and even new furniture and appliances can increase the value of a home. At the same time, the cost of living and construction expenses continue to rise – the Insurance Council of Australia reports the cost of rebuilding and repairing homes has increased by 30 per cent in the past three years. If a homeowner needs to make a major claim and their insurance policy hasn’t been updated, they could find that the sum insured no longer reflects the true cost to repair or rebuild. This can result in a payout that falls short of what’s needed.

So, how can you avoid being underinsured? Here are a few ways to prevent being caught out.

Get it Right in the First Place

There’s a lot to think about when buying a house, so you might have valued your property incorrectly when you first took out the policy. Now’s a good time to check. You’ll want to think about the cost of rebuilding your house from scratch. Remember, construction costs have increased in the past few years.

Check your Insurance Regularly

Many insurance policies will renew annually. Whatever your policy period, your insurance provider will advise you in advance when your policy is coming up for renewal. This is a great time to update your cover if you’ve made any changes to the house or bought expensive new possessions.

Do your Calculations

It can be difficult to get an accurate picture of everything you own. A good way to make sure you’ve included everything is by compiling a room-by-room inventory. Estimate the value of your contents in each room. Include everything from clothing and electronic devices to curtains and kids’ toys.

For help assessing the value of your property, you can use AANT’s sum insured calculator at aant.com.au/insurance/home/sum-insured-calculators

Update your Insurance when you Undertake Renovations

Re-tiled your bathroom or revamped your kitchen? If you’ve added a room, updated your kitchen with new appliances, or bought some furniture, you’ll want to make sure these additions are reflected in the sum insured for your home and contents by updating your insurance. This helps ensure your home and included possessions are covered to the correct value.