Thread: How current is your insurance?

You make a good point. The other issue is remembering what you had and proving it. It is easy to remember the big things but the small things are harder, and the value adds up..

The bush fires prompted me to list every tool and piece of equipment and get the current value from the various online suppliers. I also photographed everything, the contents of every drawer etc. and stored the spreadsheet and photos on the Internet.

check with insurer because tools in your garage are to be insured seperate to the house and its cost abit to do also,i was shocked.They only cover up to around $1000 or so.



scotty

Originally Posted by scotty60

check with insurer because tools in your garage are to be insured seperate to the house and its cost abit to do also,i was shocked.They only cover up to around $1000 or so.

Is that under the "general tools" umbrella category, or $1000 for specific items? I have a 'named items' policy for things that leave the house a lot (bikes, kayaks, etc) which covers the value of the specific things on the policy. My general contents insurance has limits on how much of any one category you can have (eg. $5000 on computer gear, which is a bit of a problem for me. )

My AAMI policy limits 'tools of trade' which it defines as things used to earn any income in your current or former occupation or profession to $2,000. So as I interpret it that doesn't apply to amateurs/hobbyists as long as they don't sell anything.

Very good advice Ron

Now tell me how I explain it to swmbo

Excellent advise, Ron - and always timely. As an accountant I have seen many instances where people have come to grief through poor insurance management.

* Houses, sheds and garages are frequently under-insured because people underestimate the cost of rebuilding to the standard of the existing building. Solution is to have the property professionally valued "for insurance purposes" - practice is common for commercial property but fairly rare for residential property.

* You need a "debris removal" clause, perhaps $20,000 or more if a difficult site (steep, cannot get excavator access, etc), asbestos usage, etc.

* Policies often include quite low maximum claim amounts for "unspecified items" of a class - perhaps $500, $1,000 or $1,500. And then there a definitional issues - did you lose 144 tools, spanners, sockets, drivers, and case, or did you lose one ubeaut Sidchrome tool kit? Make sure all relevant items are specified; ie listed on policy.

* Do a detailed inventory, a spreadsheet is easiest, then leave a copy off site (your lawyer, accountant, friend - you want a copy to survive if your house doesn't). Also give a copy to your insurer and get a receipt - this precludes them later arguing that an item did not exist or was over-valued as they have a list that they can check and they are accepting premiums based on that list and values.

Finally, if you have to make a substantial claim get professional advice early. Insurance fraud is rampant and a significant portion is perpetrated by insurance companies.

Cheers

Graeme

Well spoken everyone. We make sure Our insurance is regularly updated and it is really surprising, as Ron points out, just how far replacement costs have risen in the last year or so.

hmmm swmbo has been on my back about updating my insur for the shed inparticular & i've just been slack about it. Well past time to stop being slack me thinks. Thanks for the advice guys.

After reading this I just upped my home and contents values this morning - it was ages since we had done this and you forget how much stuff you accumulate!

Originally Posted by BobL

After reading this I just upped my home and contents values this morning - it was ages since we had done this and you forget how much stuff you accumulate!

Bob, I hope you do not mind me playing devil's advocate for you, but how did you arrive at the insurance valuation for your home? (ie just the house, not its contents or your toys). Valuation for insurance purposes does not have a lot to do with market prices.

Plucking numbers out of the air, you might think think the market price for your place is $800,000 and a vacant block across the road sold recently for $300,000, so you deduct one from the other and insure your house for $500,000. You then do a back of the envelope calculation; your house is 200 square metres and a builder mate mentioned a figure of $2,500 per square metre - 200 x 2500 = $500,000, so you have confirmed your valuation and you feel good about your level of cover.

Then disaster strikes and your house is totally destroyed by fire. You really liked the house, it totally suited your needs, and decide to have it re-built to the original plans. Builders start quoting above $600,000.

The insurers loss adjustor looks at the pile of fire rubble and announces that, based on the neighbouring properties your house was valued at only $400,000 immediately before the fire. Now the arguments start and the lawyers order new BMWs. Remember, the loss adjustor never saw the house, just the rubble, but his opinion is persuasive and his job is to minimise the insurance payout.

You argue that the house was worth $500,000 and the insurance company charged and accepted premiums based on that figure. The insurers counter that the valuation was merely your uninformed opinion and that you mislead them as to the houses worth.

How do you prove what the value of the house was prior to the fire and to a standard of proof acceptable in a court of law? Its basically impossible.

My firm had several cases similar to the above. Often clients had proper valuations for the business premises, but guestimated the value of their home. In almost every instance they were forced to a "commercial settlement" and accepted less than they expected from their insurers.

Our standard letter of engagement included advice to the client to have their home professional valued for insurance purposes and that they deposit their title deeds and a copy of their updated home inventory with us.

Cheers

Graeme

Gees I am dumb .I thought as long as you had enough insurance and the house was flattened,you got the house rebuilt to previous specs.(my house is near new and have all plans and specs) Contents I take photos of everything in every room and put on CDs I keep one and 2 other people have one each.Dated as well. Was told new for old .Most things of any value are near new.
How do I go insurance wise.OH forgot.My solicitor has the house legal papers etc.
Aussie

Thanks for your input, Graeme. Very useful.

How do you value items such as:
tools and equpment you bought secondhand and which may be quite old eg my Luna was built in 1984?
Items you've made yourself - furniture, workshop benches etc?

Cheers
Michael

Originally Posted by scotty60

check with insurer because tools in your garage are to be insured seperate to the house and its cost abit to do also,i was shocked.They only cover up to around $1000 or so.



scotty

Scotty60, as an insurance broker for 30 years before I retired I would suggest you change companies, I don't know of any of the major companies that require you to insure your workshop tools seperately.
Having read some of the comments regarding insurance, I have not read where anyone mentioned using an insurance broker, big mistake if you are not using a broker, selecting your own insurance company is usually done from slick ads on TV, second mistake, those companies employ phone sales persons who cannot give advice other than from their script they are provided with, remember the old saying you get what you pay for.

Regards
Brisand