Under-insurance is a real problem when it comes to home insurance. A homeowner who doesn't have enough coverage could lose money if their home is broken into, burned down, or hit by some other disaster.
If you don't know how much your things are worth, there's no point in insuring them. If you have insurance and are robbed, burned, or hit by some other disaster, it doesn't mean that you'll get the full value of your things back. All of it depends on how much insurance you have.
Many people find out too late that they didn't figure out how much their things were worth. This means that they not only have to deal with the emotional side of having their things stolen or destroyed by a fire or flood, but they also have to deal with a financial loss.
Even if your policy is index-linked, which means that your home contents insurer automatically raises your level of coverage every year, it doesn't mean that your belongings are fully protected.
For example, if you buy two DVDs and two CDs every month, that could add around GBP500 to the value of your stuff over a year. Add to that an expensive watch, a brand-new suit, children's games, and other things, and you could have more than GBP2,000 worth of things that your content insurance won't cover.
Doing a "stock take" of your property is the best way to make sure you have enough home contents insurance. Include everything, from cooking tools to the clothes and toys of the kids to the family TV. This will give you a good idea of what a sum insured is worth.
And if you're a wine expert with a cellar full of expensive bottles, make sure to check with your insurance company to see if these are covered at all.
Lastly, don't forget to get insurance for your building. If you've added a conservatory or fitted wardrobes to your home, don't forget to tell your insurance company and get more coverage.
