be careful under insuring.
There have been cases were someone has had contents insured for say 50k and when the assessors evaluate they work out you actually had 100k of stuff they will turn around and say you were only 50% insured therefore only pay half of your insured amount.
There was a huge discussion on this on whirlpool forums a little while back that went into all the ins and outs of insurance.
Insurance companies work a lot on averages, for example they would have an average figure for contents value for 3 bedroom homes with 2 adults and 2 kids and would work from that in the event of a total loss if they suspected under insurance.
what i mean is if you were insured for 50k and your house burnt down, thy would then look at that average if the average was 90k you may have issues. You need to remember insurance companies will do everything they can to get out of paying even small amounts so imagine what they would do when you are talking large amounts!
You are spot in with the Under Insurance thing, however i don't think it is that cut and dry. What i mean is that there is some sort of onus of proof required from either party when a claim is disputed. For example, an insurance company would have to clearly demonstrate that the insured DID NOT make a reasonable estimate on the value.
If you as the customer can provide some sort of indication that you indeed did try your best to value the contents accurately and in now way deceived them, then you should still get the full amount of your claim.
Also, from memory (going back a few years now) the figure is 80%. If you are less than 80% insured they can go down the under insured route. I believe if you are within 80% it is an acceptable margin for error.
In saying that, because of how many items are covered under a contents policy, the under insurance issue very rarely comes up because of the difficulty proving it. It is more common with building policies.
Really? So if you under-value, you not only lose out initially, but they slap you again?? So if we're 50% under-valuing ourselves for say $100k, they're only going to pay 50% of that ($50k)???
WOAH, might pay me to ring RACT tonight, make sure I understand.
I was under the impression that if we set ours at say $100k, and we under-value it, then we lose out. Or if we over-value it, we make a win?
Definitely not that simple Scotty.
Firstly - I can't think of any type of claim that would result in a 'Total Loss' when it comes to contents. Even when you are talking about a car or house policy, it is extremely rare that the property is COMPLETELY destroyed. If the house or car would cost more to repair than to replace, they make it a total loss. When you are talking about contents, your policy is covering hundreds of different items so it is extremely unlikely that ALL of them get destroyed, therefore you will probably never see a total loss. Even in a fire, a lot of items would survive (metal), very rarely will a house fire destroy everything. I once spoke with a guy from FESA who told me that the average house fire in WA metro is 17-22minutes and is usually confined to an area of the house.
For an insurance company to refuse to pay the full amount, they would need to prove that you didn't do your best to value the items. The PROVEN replacement value would be a lot more than you insured for.
In most cases, it would be more costly for them to gather a list of all your belongings, cost them, then get lawyers to prove that you under insured than it woudl to just pay the difference.
In saying that, you do want your policy to be close to the true value of your contents, as well as having any valuable items listed individually.
Some policies don't include plaster on your walls as part of the house, and only as contents too!
