THE cost of replacing a household’s contents is rising at its fastest rate in seven years, potentially leaving many Australians underinsured.
The cost to replace household goods climbed 3.3 per cent in the year to July, the highest growth since 2009, as Australians load up on technology and gadgets, research by Sum Insured has found.
While the prices of some household items have been flat or falling in recent years, the quantities of several items owned have increased.
Many households today have more phones, computers, camera equipment, footwear and clothing than they previously did.
This has created a false sense of security for people who mistakenly think their contents cover is enough.
The average level of underinsurance is now $40,300, putting family finances at risk when they make a claim.
Sum Insured commercial director Mike Bartlett says the quantity of household goods owned is forecast to climb further.
“They’re predicting record retail sales for this coming Christmas,” he says.
“Nobody just watches TV anymore — everybody has either a tablet computer or phone.”
Bartlett says it is easy to check that your contents match your cover.
“Anybody who spends the time can do a reasonably good estimate on your home contents by going room to room,” he says.
Write down everything — your pantry and fridge might easily hold $1000 of stuff, and include pots, pans and cutlery.
“Sometimes people are a bit blasé about it and just think about the stuff that might be stolen.” But it’s not just about stealing — it’s about fires and floods,” Bartlett says.
“Sum Insured and the leading home insurance companies have online calculators to assist policyholders with calculating their home contents replacement costs.”
Separate research by the Insurance Council of Australia’s understandinsurance.com.au initiative has found that more than two-thirds of people only guess the value of their home contents and 80 per cent believe they are underinsured.
“Use a free and independent contents calculator to help check you have enough,” says understandinsurance.com.au spokesman Campbell Fuller.
“If you have made any significant purchases during the year, remember to update your policy and amount of cover to reflect these new items.
Compiling an inventory of your household belongings can help you keep track of what you own and how much they’re worth.”
Fuller says contents policies have limits or caps for various items that mean you may only be covered for a set amount.
“Consider paying an extra premium for jewellery, artworks or other similarly valuable contents,” he says.
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