When you take out a household contents policy, you have to specify the amount of the sum insured yourself. This depends on the value of your household contents.
Your household contents include everything you would take with you when you move. In addition to furniture, TV sets and crockery, it also includes the clothes in your wardrobe, the skiing equipment in your cellar and the bikes in your garage. And let us not forget personal valuables such as your mobile phone, laptop and camera. Your household contents therefore include all your belongings.
Once you have drawn up a list of your household contents, you need to calculate their replacement value. What would it cost if you had to replace all your personal belongings today? This replacement cost is the sum insured you need to specify.
If the sum insured is less than the actual value of your household contents, this means they are underinsured. This can happen, for example, if when you take out the policy you fail to check precisely whether the sum insured does actually cover your whole household contents. Or because over time a household accumulates all sorts of things that increase the value. Changes in circumstances or new purchases such as that stylish designer sofa or that expensive bicycle also affect the total amount.
So when taking out your household contents insurance it’s advisable to allow some reserves for future purchases right from the start and select a slightly higher sum insured accordingly. As a rule, you should add around 10% to the value of your current household contents.
Also regularly check, especially after major purchases, whether the amount of cover is still correct and adjust it if necessary. If in the event of a claim you are found to be underinsured, you will not be reimbursed for the full value of your household contents, as the following example shows.
Just as it is possible to be underinsured, you can also be overinsured. This situation arises when your sum insured significantly exceeds the actual value of your household contents. Of course, in the event of a claim you will not be paid more than the replacement value of your household contents, even if your sum insured exceeds their value. However, you will be paying higher premiums than you need to. So there are two reasons why it’s worthwhile checking your sum insured.