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In terms of percentage of building insurance, can anyone kindly comment on what ball-park insured value is appropriate please? In my case, the contents are insured for 15% of the building cover. There is a lot of stuff but all run-of-the-mill.
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15% of what figure?
The easiest way for contents is a piece of paper for each room & write down everything in the room, cupboards, drawers................
Total each page & then add up the totals.
Add to this any rings, watches, jewellery, gold collection, uncut diamonds etc etc
Takes time but once you hve done it next year add something for inflation. Contents cover is cheap so better over estimate than cut corners.
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I don't see why contents insurance is linked to the value of the house. House prices vary dramatically due to location contents don't. Usually comparison sites suggest estimated values based on house size.
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>> I don't see why contents insurance is linked to the value of the house.
I think there's a broad link, the more expensive the house generally the wealthy the person is and the more expensive things they have. Not exact of course but more true than not.
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"I don't see why contents insurance is linked to the value of the house."
I didn't think the value of the house comes into insurance anyway - it's the rebuilding cost, isn't it? The value of the house is partly (mainly?) determined by the cost of the land, which in turn reflects the location, but this is nothing to do with the rebuilding costs.
Except insofar as a more upmarket house may be inhabited by people who indulge themselves in a more lavish lifestyle and who may therefore have more valuable contents, I can't see why the rebuilding costs should be linked to the replacement costs for the contents.
As has been suggested, it's better to do a realistic costing of the items in every room.
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Had a quick look at my Direct Line renewal from last year. Building cover is unlimited and contents is £100k. I think they may have offered me a lower "default"c contents figure which I chose to increase as have quite a bit of high-tec content. Even a single shelf full of CDs would cost quite a bit to replace.
I do think I'm probably over-insured but I prefer it that way. I'm not sure it made a lot of difference to the cost. FWIW my all-in premium was £264. That includes a couple of named high value bits of jewellery.
You are probably more likely to save money by shopping around than fiddling with actual cover levels. I remember being asked for nearly £600 for the same house some years back (by the incumbent insurer) before shopping around became so easy.
This year I'm with Direct Line. I like them, they have been easy to deal with when I've had claims (not often!!). Their cost usually goes up at renewal but a phone call brings it back down.
I was burgled a couple of years back ( - fairly unusual in this vicinity - )and the incumbent company at the time put some onerous conditions on at renewal - which, simply put, to me meant if I lost the keys while out, then I wasn't covered. That's when I went back to Direct Line, and I had to change a final exit lock to be compliant but otherwise they were fine.
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The way to reduce premiums is to increase the excess. Most of the cost of contents insurance relates (so my broker tells me) to fire risk - i.e. total loss - so taking the excess to a very high level doesn't make much difference. Increasing it from £100 to £1000 or £2000 does, as it means minor activity is no longer an event for an insurance co.
I guess I'm under-insured. I'm fine with that. I'm only really concerned about total loss and the cover I have, in the event of total loss, would be plenty.
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Perhaps I'm at cross purposes, but I don't see how you could be fine with a total loss if you are under-insured.
The basic mechanism AIUI is that if you were only insured to 80% of the value of the insured property then they would only pay out 80% of your losses, large or small.
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>> That's when I went back to Direct Line, and I had to
>> change a final exit lock to be compliant but otherwise they were fine.
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Does that bloke with the moustache keep coming round?
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Go Compare? Don't think Direct Line participate in that do they? But it's a good starting place to test the water.
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It shows how ineffective the ads are if I can't even remember which company they were promoting!
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2 blokes, 2 Moustaches 2 different sets of adverts, 1 for Go Compare , 1 for Direct Line.
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One point that I can't see mentioned is the thread is the insurance companies' approach to under-insurance. I had always understood that if you insure contents for, say, £50k, when the true replacement value is £100k then if there is a major claim then they will say you are only 50% covered and pay out accordingly ie a maximum of £25k on these figures. Not the £50k you might think you have.
Do any backroomers know for sure?
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Can't say I've heard of it before, why would they only give you half what it costs to replace all your things?
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Because you've only insured half of them...
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>> Because you've only insured half of them...
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Absolutely, the way the loss adjuster explained it to us was that they will look at what is damaged and needs to be replaced AND at the other undamaged contents to get an idea of the total sum insured.
This means that if your claim is for 50k and you are insured for 50k total but your contents are actually worth 100k then you will only get 25k.
In our case, about 15 years ago, we had enough insurance so we got the full claim after the loft tank burst while we were on holiday.
We have always overestimated the value ever since to be sure of being adequately insured, it is deceptive how much your house and the stuff you have in it as actually worth. CDs, clothes, etc add up to more than many people think.
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So if you had a car worth 20000 insured for 10000 you only get 5000?
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>> Because you've only insured half of them...
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But it's a half of that in the example above.
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>> But it's a half of that in the example above.
So, if you have £100,000 of house at rebuilding cost, but you only insure it for £50,000, you would expect them to pay for a £25,000 claim in full?
What you would be saying is that the parts of the building that were damaged were part of the half that was insured. That's the equivalent of the insurer saying that the half of the house that was insured does not include the damaged part and rejecting your claim totally.
If you only want to insure half your stuff, you have to decide which half, in advance, and see if you can just get cover for that.
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I was talking about contents, rather than rebuild.
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>> I was talking about contents, rather than rebuild.
Then the same applies, generally.
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Then the same applies, generally.
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Then I would expect them to pay out to what I'd insured. Seems strange not to, despite any legal/financial speak. However I'm sure your right and they won't.
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>> Then the same applies, generally.
>> >>
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>> Then I would expect them to pay out to what I'd insured.
Well that's the thing. Of the hypothetical £100,000 worth, what have you insured? You can't just say "the stuff that was stolen/damaged" after the event.
Hence the 'averaging' approach - instead of saying half is insured and half isn't, they just say everything is half insured.
It's just dawned on me what Mapmaker might mean - if say he's say 20% under insured, thus saving money, he might be happy to treat the underpayment of any claim as an excess.
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Hence the 'averaging' approach - instead of saying half is insured and half isn't, they
>> just say everything is half insured.
This is getting quite confusing, but i took the above posts to mean something else. Mind you i suppose it's designed to be confusing.
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>> One point that I can't see mentioned
then if there is a major claim then they
>> will say you are only 50% covered and pay out accordingly ie a maximum of
>> £25k on these figures.
Which is what I referred to at 10.30. I thought everybody knew that.
If you have a £100,000 house, you can't just insure it for £50,000 and expect the insurer to pay out in full on any claim that is £50,000 or lower. Same with belongings/contents.
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Insurers call it the condition of "Average"
Here is a nice clear explanation from the financial Ombudsman. I'd be very surprised if Average was not explaiIned when selecting the sum insured on any on line quote
www.financial-ombudsman.org.uk/publications/technical_notes/under-insurance-household.html
Last edited by: CGNorwich on Mon 18 Jul 16 at 12:20
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Can't say I've ever heard that phrase before.
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I'd not heard of the phrase but I assumed the principle to be widely known. In my Direct Line policy booklet it says
"If the sum insured isn’t enough to cover the cost to rebuild your buildings, we will reduce any payment in line with the premium shortfall.
"For example, if your premium was 75% of what it would have been if the sum insured was enough to rebuild your buildings, we will pay no more than 75% of your claim."
and similarly for contents
"If the sum insured isn’t enough to cover the cost to replace all of the contents of your home as
new, we will reduce any payment in line with the premium shortfall.
"For example, if your premium was 75% of what it would have been if the sum insured was enough to replace the entire contents of your home as new, we will pay no more than 75% of your claim"
I would say it's not really in the small print but I bet many people do not read their policy document thoroughly. Mine is here in case you're interested. other insurers may vary :-)
www.directline.com/lib/pdf/dl-home-158-1115.pdf
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Manatee, apologies I somehow overlooked the 10.30 post. Anyway it has opened a few eyes to the point, which you made more eloquently.
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I took manatee's reference to his under-insurance to relate to his suggestion about having a higher excess.
If you are willing to accept that for losses under say £1000 that you simply do not claim because of the excess then that is in a sense, as far as you are concerned, a calculated under-insurance.
But that is not the same as a general under-declaration of value, and I thought everyone knew about the possible risks of doing that?
You can specify individual items that are not covered, if you wish. If you had some possession that was valuable and would cost a lot to insure, but was virtually immovable and indestructible, like say an Easter Island statue, you might reasonably decide not to insure it.
:)
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It is a good idea to keep some proof of owning contents.
This includes purchase receipt, pictures showing items in your possession etc. Otherwise if you claim on content insurance, there is a high chance of refusal by your insurer.
Also, most content insurance excludes items over £1500 (varies among insurers) unless these are specifically declared while taking the policy.
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Where's the line between contents and rebuild?
If I add up how much the items in my lounge are, for example, it's some figure or other, and I look at the tv, sofa, etc. to get to it.
Now imagine the place is burned down. Does the rebuild bit of the insurance cover replacement wallpaper, painting the window frames, plastering, electrical wiring and sockets, radiators, utility pipes and so on, all of which together would be Lots of Money? Or does "rebuild" actually mean "now you have four walls and a roof again, our work here is done".
Should those things be part of contents and insured appropriately?
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Rebuilt is for the building.
Contents are replaced like for like. If you have a 2-yr old TV, insurance will pay you similar spec TV taking into account 2-yr worth of depreciation.
Not a good example as for electronics you will always end up getting a better deal but anyway illustrates the concept.
Whether something is content or part of building works in same way as what is considered part of building during buying a house.
If you hold the house upside down (just imagine) anything that does not fall over is part of house. Rest are contents.
Last edited by: movilogo on Mon 18 Jul 16 at 13:25
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>> Where's the line between contents and rebuild?
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Don't know the official line on this, I have always assumed that the "rebuild" gets you the equivalent of a new empty house, i.e. plastered, wired, floored, connected to relevant mains, possibly base painted white, but excludes boiler, kitchen fittings etc.
Anybody else have a view?
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I'm pretty sure the buildings insurance covers bathroom fittings and the same for the kitchen.
When I switched back to Barclays insurance a couple of years ago I discovered I could reduce my contents insurance cost by accepting one of the higher/standard levels of cover. I'd guesstimated cost to replace furnishing, electrical, etc for the house. I could get higher cover (pretty sure it was not needed at that level) for less than the figure I was trying to cover.
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>>>> Where's the line between contents and rebuild?
Contents is anything you would [could] take with you if you sold the house.
Carpets - yes
Sink - no
Light bulb - yes
Light fitting - no
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>> Contents is anything you would [could] take with you if you sold the house.
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If the insurance companies are sensible, yes.
some time ago, probably 25 years, we had a damaged toilet bowl.
Contents insurer said - buildings
Buildings insure said - contents
2 separate companies as the buidings insurer was via the building society
Coincidentally both the same company
So they were told - talk to each other and sort it out
Insurance companies were and probably still are a law unto themselves at times
BTW we now have one company for both building & contents.
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Ta - the upside down and general shakery image is quite a good one then.
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>> Ta - the upside down and general shakery image is quite a good one then.
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But not roof tiles, bath, boiler ?
I think the "are you allowed to take it with you when you move?" is a better test.
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I did say "quite".
Anyway, when we last moved there was Some Discussion about what could be taken or not, as the existing owner wanted to take some stuff I wanted. The solicitors in the end effectively said "he can take anything he wants, including fixtures, as long as he tells you he is going to. You are free of course to try and buy them".
So he did take a couple of things you might think were part and parcel, as he wasn't receptive to purchase. A fitted wood burner, for example, and amazingly, a garden gate that was in some bizarre way special to him. We had to replace those at some cost, but it was made very clear that was going to be the deal so we went in eyes open.
Maybe that has all changed, we've not moved since 1997.
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>> "he can take anything he wants, including fixtures, as long as he tells you he is going to. You are free of course to try and buy them".
That is, of course, true. He can take the roof with him if he wishes, provided it is clear that you are buying a house without a roof.
I meant stuff you can take with you *without* having to tell the buyer that you are doing so.
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>>Anybody else have a view?
Yes, that one. Fear of being over- or under-insured in the way martin aston notes was the reason for my original posting. I think there is a link between house contents and rebuilding costs but a broad one, hence "ballpark". I have already done a comprehensive inventory (horrified to note how many weird gadgets Mrs. Ambo has been ordering from Lakeland!) but don't know what values to assign. Although we have receipts for recent big ticket items most of the contents date back over half a century. In response to your posting, smokie, I got a Direct Line quote and it looks like an excellent place to start.
An alternative to like-for-like is new-for-old. Thanks for all suggestions but we have 30 degrees C chez moi and about 100% humidity and I must logout before I pass out (and don't let's get started on life assurance).
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I gave Direct Line the rebuild valuation that Nationwide's mortgage valuation used. It's roughly double what I paid for the house. It is listed, though.
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Bearing in mind the price of the land is a major percentage of the cost of a house. Worse case scenario the land is still there. Unless it falls into a big hole of course.
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Re-building costs vary with type of property - older buildings cost more to repair than new builds. Listed properties can cost much more than the selling price of the building.
Locally a listed building was reduced to a shell by an electrical fire. - the owner was under insured & sold it for the "site value"
The new owner spent £1.2m on rebuilding costs (forgetting what he paid for the site). That was 5 years ago - it's for sale £900K now having come down from £1.2m in 2 years.
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Contents Insurance - Falkirk Bairn
