Replacement cost, not what it is worth
Almost every contents policy is new for old. So the sum insured has to be what it would cost to walk into a shop and buy everything again, today, at today's prices.
What people estimate instead is roughly what their possessions would fetch second hand. Those are completely different numbers, and the second is always far smaller. That one confusion is behind most underinsurance, and it is entirely understandable: nobody thinks about their four year old sofa in terms of what a new one costs.
So every figure in this tool is replacement cost. It takes longer to fill in, because you end up looking things up, and that is the entire value of the exercise rather than a side effect of it.
Being underinsured does not fail the way you expect
The assumption is that if you are insured for £30,000 and own £60,000 of things, you are fine up to £30,000 and lose the difference only in a total loss. That is not how it works.
Most policies apply average. If you are covered for half of what you own, they settle claims at half. A £4,000 kitchen fire claim pays about £2,000, even though £4,000 is well inside your sum insured and nothing about that claim is unusual.
That is the part worth understanding, because it changes the risk completely. Underinsurance is not a tail risk that only matters if the house burns down. It is a discount applied to every claim you ever make, including the small ordinary ones that are the reason most people have the policy.
There are three limits, not one
The sum insured is the headline. Underneath it sit two more that a claim also has to get past.
- The single article limit. A cap on any one item, typically a percentage of the sum insured. Anything above it is not covered for its value unless it is specified individuallyon the schedule, however large your overall figure is.
- The valuables limit. A separate cap on the whole jewellery and valuables category, again a percentage of the sum insured. Independent of the single article limit rather than an alternative to it.
Specifying an individual item usually costs very little and it is the difference between a claim and an argument. The tool flags anything over your single article limit as you go.
The rooms where the missing value hides
Nothing in the house gets underestimated more than clothing, and it is not close. People price a wardrobe and forget that it is full. Add up what it would cost to replace every item of clothing in the house and the number is routinely several thousand pounds.
After that it is the garage, loft and shed: tools, bikes, luggage, camping gear, Christmas decorations. The place things go to be forgotten is also the place a lot of money is sitting.
And two smaller ones that get missed entirely. The contents of the freezer is a real figure, and many policies cover it specifically. Integrated kitchen appliances feel like part of the building and are usually contents, so if you do not list them nobody else will.
Check what is covered outside the house
Cover for possessions you take out with you, and for things like a bike or a laptop away from home, is normally an extension rather than part of standard contents.
It is a cheap addition and an expensive assumption. A great many people discover the distinction after a phone has already gone missing, which is the worst moment to read a schedule properly.
Photograph it, and keep the copy somewhere else
Take pictures as you work through the rooms. A loss adjuster asking what was in a room is a much easier conversation with photographs than with memory, particularly a few weeks after a fire or a burglary when nobody is thinking clearly.
Then keep the inventory and the pictures somewhere that is not this house. An inventory in a drawer is no use after the event that made you need it. The PDF is there so you have something to email to yourself, and this tool saves only to your own browser on this device, with nothing uploaded anywhere.
Common questions
How do I work out my contents sum insured?
Add up what it would cost to buy everything again today, room by room. Almost every contents policy is new for old, so replacement cost is the number the sum insured has to match. What most people estimate instead is roughly what their possessions would fetch second hand, which is a completely different and far smaller figure, and that single confusion is why underinsurance is so common.
What happens if I am underinsured?
Not what people expect. Most policies apply average, which means they settle claims in the same proportion as the shortfall. Insure for half of what you own and a £4,000 kitchen fire claim is settled at around £2,000, even though £4,000 is comfortably inside your sum insured. The penalty lands on every claim, not only on a total loss.
What is a single article limit?
A cap on any one item, usually a percentage of the sum insured, applied unless that item is specified individually on the schedule. So a ring worth more than the limit is not covered for its value however large your overall sum insured is. Specifying it usually costs very little and it is the difference between a claim and an argument.
Are valuables covered by my sum insured?
Only up to their own separate cap, which is a further percentage of the sum insured for the whole valuables category. So there are three limits stacked up: the sum insured, the valuables cap, and the single article limit. A claim has to get past all three.
Which rooms do people forget?
Clothing is the most underestimated item in any house, by a distance. After that it is the garage, loft and shed, which is where things go to be forgotten, and the contents of the freezer, which is a real number nobody thinks of. Integrated kitchen appliances are often missed too because they feel like part of the building.
Is my laptop covered when I take it out of the house?
Usually not as standard. Personal possessions cover, and cover for things like a bike or a laptop away from the home, are normally extensions rather than part of basic contents. Plenty of people find this out after a phone goes missing, so it is worth checking the schedule rather than assuming.