Under-insuring Kiwis risk substantial losses warns AA Insurance

Kiwis who under-insure the contents of their homes risk facing a substantial loss in the event of a major house fire, burglary or flood, says AA Insurance.

AA Insurance is urging Kiwis to insure the contents of their homes for full replacement value and to specify items of particular worth, as not doing so could leave them short when they need to make a claim. They may have to make up the difference out of their own pocket.

A recent AA Insurance claim involved the total loss of a customer’s belongings following a fire caused by improperly discarded embers. Unfortunately the customer had significantly undervalued the contents of their home. This meant that although they had lost over $130,000 worth of contents during the fire, they were only able to claim for what they had insured, which was $67,000.

“Undervaluing the items you cherish in your home can be disastrous when tragedy strikes, because everything you own could be lost in a matter of minutes,” said Head of Corporate Affairs, Suzanne Wolton.

“Dealing with the aftermath of fire or flood is stressful enough on its own, so to avoid compounding that stress, you can take a number of practical steps now.”

Another recent AA Insurance claim involved the loss of one customer’s entire jewellery collection.

Unfortunately, the customer had not specified the items of jewellery worth over $2,000, which is necessary to provide individual cover for higher value items. This meant that although the total jewellery collection was worth around $20,000, they were only able to claim for the policy’s limit of $5,000.

AA Insurance advises its customers to:

• Make sure that you have enough cover to replace the entire contents of your home. Consider a worst case scenario: for example, how much it would cost to replace all of the contents in your home if the worst happened?
• Review your policy and contents regularly. Check that you have advised your insurer of any items that must be specified separately.
• If you have purchased anything expensive, make sure you increase your insurance to cover it.
• It is worth getting valuations done for any precious items, antiques or works of art.
• Photograph individual pieces of property and keep the photos outside your home.
• Keep copies of receipts for higher value items such as electrical goods, art pieces, and bicycles.

 

“Taking a few extra steps to ensure all your contents are protected means that if disaster did strike, you wouldn’t need to dip into your own pocket,” says Suzanne. “Some items over a certain value are generally required to be listed separately on the policy. If you are unsure of this value, contact your insurer to make sure there are no surprises down the line should a claim be made.

“It’s important to know what kind of contents policy you have too,” continued Suzanne. “If you have a full-replacement policy, remember to calculate your total claim value based on how much it would cost you to buy each item new today, and not how much you bought them for originally.”

While calculating the current value of everything you own might seem like a daunting task, AA Insurance offers an online calculator on its website. This tool has a comprehensive list of most normal household contents and their approximate value.

“People are often surprised at how quickly things add up,” said Suzanne. “Keep in mind that contents include everything from TVs, furniture and musical instruments through to linen, towels and even cutlery. Each time a policy comes up for renewal is the perfect time to re-assess your cover and let your insurer known of any extras.”