SEVEN out of 10 Australians are putting tens of thousands of dollars at risk because they guess the value of their home’s contents for their insurance.
And almost half of them have no idea how much their stuff is worth or believe they have underestimated its value, according to new research by Understand Insurance.
It also found that 53 per cent of renters do not insure their contents at all, even though one in 15 Australians make a claim every year.
“The odds of making a claim are quite high,” said Understand Insurance spokesman Campbell Fuller.
“Many Australians don’t really think how much their contents are actually worth, and may not appreciate how difficult it would be to resume their quality of life if their contents were damaged or destroyed,” Mr Fuller said.
“If you only insure three-quarters of the value of your contents, the insurer can say ‘we will only cover you for three-quarters of your contents’ (when you go to make a claim).”
Understand Insurance, part of the Insurance Council of Australia, says almost 720,000 claims are made each year on the nation’s 10.9 million home, contents and landlord policies.
Its research found that more than half of Australia’s renters do not insure their home’s contents, compared with about 10 per cent of homeowners.
Mr Fuller said Australia now had 4.5 million renters and plenty of them owned expensive items including computers, mobile phones, televisions, clothes, furniture, bikes and sporting equipment.
The Australian Securities and Investments Commission’s senior executive leader for financial literacy, Miles Larbey, said renters might think they have “nothing worth stealing, but it could find themselves in financial hardship if disaster strikes”.
“For their own peace of mind it is worth considering contents insurance as it could cost far more to replace their items, including clothing and electronics, if they are stolen or damaged,” he said.
Working out the true value of a home’s contents can be as simple as moving from room to room and writing every item down on paper, then estimating their value.
Mr Larbey said most insurers had calculators or other tools on their websites to help consumers work out how much cover they needed.
“Decide whether you would want to replace any lost or stolen items with new or second hand items, as this could affect the total amount of your insurance and premium payments,” he said. Understandinsurance.com.au also has calculators and households inventory checklists.
Insurance was in the spotlight this month because of disastrous storms and flooding in several states but Mr Fuller said the most claims for contents insurance came from kitchen fires.
“Those things can roar through a property very quickly. And a small leak in a roof can cause a large amount of damage inside a property.”