Insuring your possessions
Britons spend a huge amount of time and money maintaining, decorating and filling their homes with possessions. People are spending more time at home, and consequently spending more on household possessions and upkeep, resulting in the homes and gardens sector becoming the fastest growing area of consumer spending last year (rising 12%).i According to the government’s wealth and assets survey, the median household in the UK now contains over £36,000 worth of possessions (the average being £47,700).ii Despite this, around 16 million British adults don’t have contents insurance at all, and many more have underestimated their requirements.iii
It’s unpleasant to contemplate losing possessions to fire, flood, theft or other calamities. There are always going to be sentimental items that are for all intents and purposes irreplaceable. However, having solid insurance policies and helpful records can enable people get back on their feet much quicker (while protecting reserve savings).
Should you need to make a claim it is important that you can prove what you lost, in line with the policy provider’s expectations. Failure to do this could make the claim appear potentially fraudulent and the provider can refuse to pay out.
Documenting purchases is very helpful. By going through your house room by room with a camera, you can easily produce photographic and/or video evidence of what you possess. Ideally, you should create an inventory as well. This will be helpful not only in making a claim, but also aiding your memory of what you actually own.
The rise of online shopping has increased the paper trail associated with purchases, which can be very helpful for claims. Purchases from online stores are typically permanently logged in your account, there is almost always a separate email confirmation (often easily searchable), and the record of the amount in your debit or credit account. Try to make sure that you are able to log into your important accounts no matter what happens. If your credentials are stored on a computer and it is destroyed, you may not be able to access important information, or in the event of theft a criminal may take control of your accounts.
The easy availability of cloud storage makes maintaining documentation far more resilient than in the past, providing you use it. Proof of purchase receipts aren’t much help if they are destroyed along with the item, and over time they may fade or get lost long before they are actually needed. It is well-worth photographing or scanning receipts to ensure a legible record survives.
As the world becomes more digitised, remember that online accounts may have substantial value attached to them (digital music and movie storefronts for example). Some policies may cover digital goods, but this is a relatively new area and can have numerous caveats.
Know your limits
Besides being underinsured, the other key aspect that can diminish your payout should the worst happen, are policy limits.
Some insurers impose a maximum limit that they will pay out. Others may not set a strict numerical limit, using terms like “unlimited sum insured”. Terms like this can be a little misleading, you should check for other restrictions that effectively do limit the coverage. For example, insurers may set a limit on the size of the property, such as covering houses with no more than 5 bedrooms.
The single item limit dictates the upper payment an insurer will give you for any item, regardless of how valuable it was. So, for example, if you lost an engagement ring worth £4,000, but the single item limit on the policy was £2,500, you would only receive the latter sum. This even applies if the total claim is less than the maximum limit. Nearly half of contents insurance policies impose a single item limit between £1,500 and £1,999, with only a fifth offer limits of £7,500.iv If you have one or more particularly valuable items, it may be worth taking out a separate policy specifically for them (valuable item coverage) on top of your contents insurance. This does not have to be from the same provider, allowing you to shop around.
Different policies can vary considerably in what they will pay out for individual items. Some offer amounts equivalent to purchasing the product again new, while others will only provide what they consider to be the current value of your possessions - which can be drastically less than the initial purchase price.
When considering contents insurance or other financial matters, it’s helpful to consult those with expertise, money4dentists are Independent Financial Advisors exclusively catering to dentists. Dentists can have relatively complex and interrelated financial needs, money4dentists understands this and provides expert financial advice for dentists across all aspects of their lives, not just in their professional career.
The last thing you want should a traumatic event like fire or theft occur is to find that you either have no coverage, or that your coverage is inadequate or defective. By consulting with an Independent Financial Advisor, you can help ensure your insurance works for you when you need it most and get the best out of your investments for years to come.
i ITV News. Britons increase spending on underwear as more work from home – mintel. ITV News. 2019. https://www.itv.com/news/2019-07-11/britons-increase-spending-on-underwear-as-more-work-from-home-mintel/ September 12, 2019. ii ONS. Physical wealth: wealth in Great Britain. Office for National Statistics. 2019. https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datasets/physicalwealthwealthingreatbritain September 12, 2019. iii Financial Inclusion Commission. Financial inclusion: improving the financial health of the nation. Financial Inclusion Commission. 2017. https://www.financialinclusioncommission.org.uk/pdfs/improving_access_to_household_insurance.pdf September 12, 2019. iv GoCompare. Cover collectibles, jewellery and other valuables. GoCompare. https://www.gocompare.com/home-insurance/jewellery-and-valuables/ September 12, 2019.