Renovating your home is a thrilling experience. New spaces, modern finishes, and added functionalities can significantly enhance your living conditions and increase the value of your property. However, amidst the excitement, many homeowners forget a crucial step—reassessing their contents insurance. Renovations can significantly change the value of your home’s contents, making it essential to reassess your insurance.
Here are a few reasons why it can be a good idea to update your insurance post-renovation:
Increased value of your possessions and home
Any luxury items or high-value additions, like custom cabinetry or expensive tech gadgets, increase the overall worth of your home’s contents. Adding a new kitchen, bathroom, or custom-built furniture typically involves significant investment. These enhancements will likely increase the overall value of your home and its contents, often surpassing your current coverage limits.
Increased risk or safety
Certain upgrades, such as installing security systems, may lower your premiums by reducing risk, while others, like building a pool or extending the home, might increase your insurance cost due to added liability or property value. Reassessing ensures that your policy reflects the current status of your home. It’s also an excellent opportunity to check that your safety features qualify for home insurance discounts.
Avoiding underinsurance
If you don’t adjust your insurance policy, you run the risk of underinsurance. This occurs when the insured amount doesn’t match the actual value of your home’s contents. According to an analysis by property investment firm MCG Quantity Surveyors, around 18 percent of residential, and 24 percent of commercial properties are underinsured in Australia. Being underinsured can be risky. In the event of a claim, you might receive a payout far lower than expected, leaving you to cover the difference. Regularly reassessing your policy avoids this pitfall and ensures you’re properly compensated for your belongings.
Tips on how to accurately reassess your insurance needs
Take inventory
According to research by home insurance experts Compare the Market, a whopping 30 percent of Americans surveyed don’t have their valuables insured. Here’s a few tips on how to avoid getting caught out:
List all your new possessions and improvements and maintain an updated inventory to keep track of what you own, including their value and date of purchase. This record will help you estimate the total worth of your belongings accurately.
Estimate costs
Calculate the replacement costs for these items. This may require some research or professional help. Keep in mind that the value of your possessions may have appreciated since their purchase date.
Consult with your insurance provider
Schedule a meeting with your insurance agent or broker to discuss any changes in your home and its contents. They can evaluate the updates made and advise on appropriate coverage limits that reflect the current value of your possessions.
Consider additional coverage options
Depending on your specific needs, you may need additional coverage for high-value items such as jewellery, antiques, or art pieces. Talk to your insurance provider about add-ons that offer more extensive protection for these types of possessions.
Update your policy
Ensure your insurance coverage aligns with the new value of your home and belongings. Be sure to update any changes in your address, renovations, or additions made to the property.
Post-renovation, it’s crucial to reassess your contents insurance to ensure adequate coverage for new additions and increased property value. By doing so, you can better protect yourself from potential financial loss and guarantee peace of mind knowing your updated home is fully insured.