Contents insurance is a popular form of insurance that calculates the total cost of all your important and vital possessions. At first glance, contents insurance appears easy to dissect and calculate. However that is a little nave to think, as contents insurance has several “grey areas.” Ask all these questions before calculating a number.

First off paint a scenario into your head. It’s not a pleasant scenario but you need to consider these options once in awhile. Your kitchen is destroyed by a rapid flood or devastating fire. Nothing valuable is left behind. Now you must make a claim. But not just a claim, actually two claims. You need a claim for appliances that were built into the room, and another claim for possessions that were added or are movable.

Keep in mind that fires, floods, wind damage, and theft account for the majority of damages at any given home. You can protect your home sometimes from theft, but natural disasters like fires, floods, and wind are almost impossible to avoid. So make sure they are all covered under your policy.

Insurance companies will also consider “add-ons” which incorporate coverage of insuring goods stored outside the house, such as in a garage. Factors that commonly affect house contents insurance costs are the location of the property, its security systems, whether it is left un-attended for long periods, and history of previous claims among others.

Another area you want to guarantee is covered is the replacement value. This differs from the current market value in those extremely important valuables such as antiques and jewelry will be at least covered at replacement or emotional value if they are unable to be replaced. Expect higher premiums however if you wish to protect these coveted items.

Most people will not have to worry about a ton of replacement value since you likely do not own a lot of jewelry or antiques. However, current market value is a good way to rip you off. Insurance agents will assess the value of the stolen or lost goods based on current value and not what it was worth back in the day.

Always take the sensible approach when calculating contents insurance. Break down and cross section the value of goods losing money or in bad shape. Compare that to the amount and value of goods that are worth a lot. Do your sums accordingly.

Unless you have a lot of extremely valuable goods, stay with a fairly low premium. Chances of your home getting destroyed are low and the value of your property might not be that much to begin with. Keep in mind that an average family making over $200,000 pays on average 3% of that number back to insurance companies.

Graham McKenzie is the content Syndication Manager at insurance123.co.zaSouth Africa’s leading Household Insurance information portal

categories: Insurance,Household Insurance,Contents Insurance,Property,Finance