If you ask anyone to estimate the current value of their home contents, the chances are that they will underestimate the total value by more than 50%.
According to Bjorn Laubscher from Mirfin Valuations, the reasons for this are two-fold:
1. One tends to underestimate the number of assets amassed over the years.
2. The cost of replacing an asset obtained 10 years ago has most likely quadrupled.
The insured party needs to spend some time creating a detailed list of all their assets and then research its current replacement cost. It is highly recommended that every single item is photographed – with the images stored in a safe place – to serve as proof of ownership in the event of a claim, as it is unlikely that all purchase receipts still exist.
Laubscher says a diligently-performed asset stocktake can easily consume an entire weekend in an average household, not including the research required to determine all replacement values as if replacing old with new.
Moreover, a common obstacle encountered is that many items may have been discontinued, or are simply outdated, making it extremely tedious to assess.
According to Laubscher, a professional asset valuation is a wise investment for any policyholder, not only because the sum insured will be spot-on, but because the surveyor is able to perform this task with more diligence. Depending on the scope of assets to be recorded, such a valuation will usually take only two to three hours.
“Our surveyors also perform comprehensive risk surveys with regard to security, fire protection, gas installations, electrical compliance, thatched roofs and natural hazards where they will point out potential risks and how it can be reduced or eliminated. Having minimised all potential risks, the insured will be in a position to negotiate a better premium with the insurer.”
Let’s consider the survey and valuation procedure:
1. How do we define ‘contents’?
Can an oven or air-conditioner be considered ‘content’? The answer can be found in the following test: in your mind, turn your house upside down – everything that falls out is regarded as contents or moveable assets. Therefore, anything fastened to the floors, walls or ceilings – such as a built-in oven or air conditioning unit – is not covered by contents insurance, but by the buildings policy.
2. Photographs are necessary
“When taking stock of movable assets, we methodically work our way through each room, documenting and photographing each and every item. Photographing the contents is a necessity as it serves as proof of ownership in the event of a claim. Moreover, also minimises the time spent on the client’s premises and serves as a vital reference for our research on the replacement values,” says Laubscher.
3. Respecting our clients’ privacy
Laubscher says surveyors should never open any cupboards, drawers or boxes. An average percentage is applied in valuing items such as clothing, bed linen, crockery and cutlery. “For this reason, we normally request that any high-value items get pointed out to us if it is stored out of sight.”
4. Valuation certificate
Laubscher says a client will be required to present surveyors with a valuation certificate for all jewellery, paintings, artwork, antiques, collections and other valuables. The appraisal of such assets should only be done by a specialist in the relevant field. “Items of high value must be physically inspected and assessed – no one appraiser can claim to be an expert in all fields alike. Jewellery always must be handled exclusively by the client.”
“Also, we will request the client to provide an estimated value for all the curtains in the house,” he adds.
5. Safekeeping of documents
Once the survey is completed, all photographs and documents will be kept in an electronic safe and will not be made available to any third parties without the client’s written consent.
In valuing the contents, most asset management specialists will consult annual guide books to estimate the value of an item or similar item. “To achieve a higher degree of accuracy, we research the open market for the replacement cost of each exact item or its successor. In the case of unique items where we are unable to source a price, we will agree with the insured on a suitable value.”
The duration of the actual survey depends on the scope of assets to be recorded, but usually takes about two to three hours for an average household. The subsequent survey report will be completed within 10 to 15 working days from the survey date.
Article credit https://www.property24.com/articles/insurance-tips-dont-underestimate-your-home-contents-value/27931