Whether you have a passion for designer clothes or your tastes are more Primark than Prada, you are potentially at risk of underinsuring the clothing, shoes, jewellery and accessories in your wardrobe according to claim ratings agency Defaqto.
Recent research into wardrobe contents valued the average woman's wardrobe at approximately £7,000 - around double what she thinks it's worth.
Defacto says people are all probably woefully underinsured and, in the event of a major claim such as a fire or flood destroying contents/clothes, claimants could receive a smaller payout from our insurer than we expected.
"Always look at the detail of your insurance policy to ensure you're properly covered, said Mike Powell, Insurance Analyst for Defaqto.
“Many people end up underinsured as insurance providers frequently apply specific single item limits for valuables kept in the home. In fact, 34 per cent of home contents policies available state that they have a valuables single item limit of £1,500 or less for items kept in the home.
“This means that you need to specify any valuable that is worth more than £1,500 to ensure that full cover is given".
Tips to ensure that you do not end up underinsured include:
1. Estimate value on a "new for old" basis: Insurers base contents sum on the full replacement costs of replacing items with brand new items. Most insurers provide cover on a 'new for old' basis and therefore, the overall contents sum insured should reflect this.
2. Keep abreast of changes to your lifestyle: To calculate the appropriate level of cover for your contents involves nothing more than going from room to room, itemising everything and assigning a replacement value to each item. In any event, it is usually advisable to compile a proper inventory.
Once you have recorded the value of your worldly goods on a spreadsheet, it should not be too difficult to keep it updated. It is also advisable to keep receipts, valuations and photographs of valuable items.
3. Make valuables a special case: Remember to consider that valuable items, such as jewellery may need to be specified if they are higher than the insurers 'single item limit' for valuables. Check with the insurance provider whether they have a specific limit. Generally most insurance providers will apply specific limits for valuables, but there are a few that also have a limit for general contents.
4. The devil is in the detail: To avoid disappointment, consumers should think carefully about exactly what they need from a financial product at a given time, as features and benefits vary enormously.
