Everyone has possessions that they feel are irreplaceable. When insuring your home, it’s easy to focus on these “priceless” items. However, do a quick tally, and you’ll find the value of your other things adds up quickly.
If disaster strikes, are you in a position to replace everything in your home? What about your home itself?
By creating a comprehensive itemised household contents list, you’re ready to provide a contents list for an insurance claim at a moment’s notice. This contents inventory list makes it simple to determine the average value of household goods upon which to base your reimbursement request.
In this post, we’ll look at why it’s crucial to create an inventory for home goods insurance purposes, and we’ll wrap it up with the best way to take stock of household items.
How Do Insurance Companies Determine the Replacement Value of Your Home?
To ensure that you have adequate cover, it’s important to understand the different types of buildings and home contents valuations.
Companies typically allow you to choose between replacement cost and market value. We usually recommend that clients choose the former. Let’s delve into why it’s crucial for home items insurance in particular.
What Is Replacement Cost?
Replacement cost and market value are two separate things. Replacement cost refers to how much it would cost to rebuild the entire structure from the ground up if it’s destroyed.
Market value is the property value as a whole, land and amenities included. You could, for example, build two identical houses in different areas, and the market values could be vastly different depending on things like crime in the area and proximity to schools.
The contents of the home also come into play, so it’s essential to keep a strict home inventory spreadsheet.
What Replacement Cost is NOT
Replacement cost is not going to cover your mortgage for the land purchased with your home.
What Will Affect Your Home’s Replacement Value?
The following factors all play a role in how much it costs to rebuild your home:
● The size and footprint
● Age – the older the home, the more difficult it is to recreate period details
● The quality of the finishes
● Whether there are custom features
● If there are built-in cupboards or other fixtures
● Whether the attic or cellar are renovated or not
● If there’s a garage
● Exterior features like the roof and windows
● Renovations and interior upgrades
● The value of your furniture and other valuables
How Do Insurance Companies Come up with Their Numbers?
Insurance companies in the United Kingdom look at several factors:
● The cost of the materials and energy used during the build
● Labour costs
● Fees related to obtaining permits and planning permission
● Professional fees
They may confirm the rebuild cost through the homebuyer’s survey or using the BRICS rebuild calculator. Your insurance contents list provides them with clues to what’s inside the home. They’ll also use the services of a loss adjuster to determine their liability.
To better protect yourself, it’s wise to employ a loss assessor before submitting your claim. First, you should understand the difference between a loss assessor and loss adjustor.
How Do You Know You’re Adequately Insured?
Property claim payments in the United Kingdom showed strong annual growth between 2004 and 2018. By contrast, experts forecast one million fewer policies will be issued between 2018 and 2024.
Add in the fact that around 6 million UK homes are currently uninsured, and a worrying picture emerges.
Could you be the next person left unprepared for loss? Find out now by:
● Having a professional property evaluation or checking the rebuild price for your home at BRICS
● Making a complete list of household items and pricing each
● Ensuring that your insurance contents inventory form on record is up to date
When and How Often to Make a Home Inventory List
You should make your list as soon as you can. Even if you’re only able to do one room at a time, get started today. It’s a simple list of valuable stuff around the house, so it won’t take long.
Save yourself work in the future by updating your personal property inventory list when you buy something new, and perform a walk-through every two years to see if there’s anything you need to change on the insurance inventory form.
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