House Insurance question

[MassiveJim]

Just in the process of renewing house insurance and am considering something I never paid much attention to before.

What happens in the event of a total loss eg Fire regarding a payout.
If I insure my contents for £75k, should the insurer just payout that amount and then we go about replacing our belongings or is it normal for them to expect some kind of itinery of all household items.

the cheapest insurer confirmed they would want an itemised list, and the one I have just been on the phone to had very "wooly" wording with regard to this.

I hope to god this never happens but should the worst happen the last thing I want to be doing whilst trying to piece our lives back together is be arguing with the insurance company about how much they should pay me.

 

[Semple]

Yes you'd need some sort of proof for what you're claiming for.

I.e. you couldn't just insure your home contents for £1million when you've only got 10k worth of stuff.

Your best way of doing this would be taking a few photos around the house now, and saving them somewhere safe should you ever need them. Of course update the photos whenever there's any major changes.

 

[kindai]

Yup, everytime you take out a new policy just go around the house quickly with your phone snapping all the rooms (any any particular items of value that might not be visible) and upload them to gmail or something similar. Be sure to manually include specifically high value items in the quote if you have the option to.

 

[b0rn2sk8]

It's all the small things that add up, you may have a fancy OLED TV but it will cost the average person more to replace their entire wardrobe of clothing where you can't build it up over time and take advantage of sales etc.

 

[MassiveJim]

I did a quick reccy of everything major in the house and came to about £50k.
That includes all electronics, furniture and estimated about £5k in clothes total for 2 adults and 2 young children.

But that won't account for everything, how do you record all of the small things ?
There is so much stuff in our house I cannot imagine I could ever accurately record it all.

 

[theone8181]

How does this work if it's old stuff, I.e. say you have a PC that cost 2 grand but it's now 5 years old? I've never bothered with pictures (however I've never had to claim). Surely you can't be expected to keep a recipt for everything?

 

[Jez]

I always wonder this and this is partly why I am reluctant to ever bother buying home insurance (I have not actually had any for a few years now, I probably should, I know).

We have a reasonable size 5 bed 4 bath house and as you can imagine, as others have posted, we have so much stuff that if it all disappeared tomorrow I wouldn’t be able to even recall most of it, let alone be able to prove ownership of any of it. Loads of our furniture and larger items I didn’t even buy as such, we seem to acquire so much from other houses in my parents ownership, from businesses in the family, etc. I don’t have receipts for anything. I am never clear how it would work at all even if I did insure, how could they possibly just accept a list written in conflict of interest by the claimant?

 

[b0rn2sk8]

@Jez do you have buildings insurance? It’s normally a mandatory requirement of any mortgage. For the sake of £130 a year it seems risky to not have any given the impact it will have should something happen.

You also have to remember a total loss is pretty rare, the price of the insurance reflects this. Insurance companies have to take your word for it to a certain extent. They do have single item limits for valuables and insurance companies have justice claims data so they know what your average 4 bed house will contain and can query anything that looks suspicious.

Check the terms of the policy, any decent policy should be new for old. E.g. they’ll give you enough money to buy an equivalent new item.

 

[HungryHippos]

I always wonder this and this is partly why I am reluctant to ever bother buying home insurance (I have not actually had any for a few years now, I probably should, I know).

We have a reasonable size 5 bed 4 bath house and as you can imagine, as others have posted, we have so much stuff that if it all disappeared tomorrow I wouldn’t be able to even recall most of it, let alone be able to prove ownership of any of it. Loads of our furniture and larger items I didn’t even buy as such, we seem to acquire so much from other houses in my parents ownership, from businesses in the family, etc. I don’t have receipts for anything. I am never clear how it would work at all even if I did insure, how could they possibly just accept a list written in conflict of interest by the claimant?

If you have a mortgage you should really have insurance, otherwise if your house burnt down due to an accident you could be paying for a mortgage on a house that doesn't exist.

£120 ish a yeah for a bit of peace of mind.

Hell I'd probably have insurance even if I didn't have a mortgage, at least buildings if not contents as well.

 

[thezappa]

It does vary, my partners parents were flooded in 2014 and they had insurance with AXA. They didn’t have pictures of everything but it was a 5 bed house with 3 bathrooms and A LOT of stuff accumulated over the years. They were honest about what they claimed (IKEA sofa for example) but AXA never checked any of it and they were kicking themselves that they could have got better stuff as replacements.

 

[Goksly]

Think flooding is different to fire... Typically with flooding its not just one property, and also people are unlikely to lie because they will still have the damaged goods. Where as with fire its probably only your house and the proof has literally gone up in smoke. I'm assuming there is a bit of flexibility on the insurers part so long as something isn't out of the ordinary.

 

[Jez]

@Jez do you have buildings insurance? It’s normally a mandatory requirement of any mortgage. For the sake of £130 a year it seems risky to not have any given the impact it will have should something happen.

You also have to remember a total loss is pretty rare, the price of the insurance reflects this. Insurance companies have to take your word for it to a certain extent. They do have single item limits for valuables and insurance companies have justice claims data so they know what your average 4 bed house will contain and can query anything that looks suspicious.

Check the terms of the policy, any decent policy should be new for old. E.g. they’ll give you enough money to buy an equivalent new item.

No i dont have anything at our own home, the only insurance products which i buy are landlord insurance for other properties (you never do know what tenants may do to cause you a liability), and car insurance with giant excesses just to make the cars legal. I always view insurance as something which you will on average, by the nature of the product, lose on?

Anyway, i am genuinely curious as to how it works in the event of a bad fire - i doubt that most people do take pictures/videos as suggested in here? Perhaps they do and i am the only one who couldn't prove a damn thing to them in the event of a total loss like that. I suppose as you say, as this is a rare event, they will likely make it quite a personable process and weed out anything suspicious. Anything valuable would be listed as you say, too. As the gent above mentions, a flood would be something rather different and would (you would hope!) be clear cut.

 

[theone8181]

Fires a good point, all your recipites (apologies on spelling), would have gone up in smoke surely? I suspect if you are honest, even with a bit of embellishment it would be OK, realistically I reckon most people will have similar items in the house like sofas and TVs.

 

[b0rn2sk8]

@Jez- you wouldn't be able to claim anything because you don't have insurance

For me it's even more of a no brainier than car insurance, the insurance is so cheap (~£120 a year) but the asset you are insuring is significant and the impact on losing it is catastrophic. It's something you'll never really recover from financially if it does happen, ever. Being left homeless, potentially with serious debt (due to outstanding mortgage), having no belongings and never being able to own your own home again just isn't work the risk for saving £120 a year even though it would be very unlikely I would ever need it.

As for the full inventory this pictures isn't something you would expect to see (of course check your terms!). Think about it, what did people do 10 years ago when smart phones were not a thing? What about those who are digitally excluded? Did they have a full written inventory down to the last sock in a fire proof safe or stored off site? That isn't really reasonable. Where do you draw the line too, do you count every spoon and sock?

Insurance companies are all about the risk and data, they have decades of claims history data and standard models for things if the customer can't estimate. They'll know how much the average claim would cost them for a total loss of a 3 bed house, if a customer puts in a larger than expected claim they will be asked to justify it. It's pretty hard to inflate a claim because of things like single article limits and you'll simply just run out of space in the house. Generally speaking insurance fraud isn't at the top of peoples agenda in a time of crisis and most people grossly under estimate the replacement cost of their belongings.

That said, I'm off to make an inventory of my Lego, I've lost count of what I've got, some of it is very rare and most of it has been out of production for years, it will cost an arm and a leg to replace!

 

[theone8181]

@Jez- you wouldn't be able to claim anything because you don't have insurance

For me it's even more of a no brainier than car insurance, the insurance is so cheap (~£120 a year) but the asset you are insuring is significant and the impact on losing it is catastrophic. It's something you'll never really recover from financially if it does happen, ever. Being left homeless, potentially with serious debt (due to outstanding mortgage), having no belongings and never being able to own your own home again just isn't work the risk for saving £120 a year even though it would be very unlikely I would ever need it.

As for the full inventory this pictures isn't something you would expect to see (of course check your terms!). Think about it, what did people do 10 years ago when smart phones were not a thing? What about those who are digitally excluded? Did they have a full written inventory down to the last sock in a fire proof safe or stored off site? That isn't really reasonable. Where do you draw the line too, do you count every spoon and sock?

Insurance companies are all about the risk and data, they have decades of claims history data and standard models for things if the customer can't estimate. They'll know how much the average claim would cost them for a total loss of a 3 bed house, if a customer puts in a larger than expected claim they will be asked to justify it. It's pretty hard to inflate a claim because of things like single article limits and you'll simply just run out of space in the house. Generally speaking insurance fraud isn't at the top of peoples agenda in a time of crisis and most people grossly under estimate the replacement cost of their belongings.

That said, I'm off to make an inventory of my Lego, I've lost count of what I've got, some of it is very rare and most of it has been out of production for years, it will cost an arm and a leg to replace!

See there's a good example, I've got the current 'big'falcon, but I know the older ones are worth way more than what they were new. So how much would a payout be for them?

 

[Jez]

@Jez-

That said, I'm off to make an inventory of my Lego, I've lost count of what I've got, some of it is very rare and most of it has been out of production for years, it will cost an arm and a leg to replace!

Haha, now that i am with you on(!) We have hundreds of sets including most of the large technic sets from the 80s/90s as well as most of the trains and city from the same period. The house i can live with risking (the value is in the plot and its not like a fire can ruin your footings and drainage, i'd almost relish the excuse to rebuild it!) but the Lego would actually be quite upsetting!

 

[HangTime]

I find estimating home contents very difficult, usually the lowest amount of cover provided by an insurer feels more than enough but it's easy to overlook the cumulative value of smaller items you have a lot of. I don't think we have any single item that is worth over £1000 but we have a huge number of items that cost dozens of pounds each (toys, clothes etc). And for example the total cost of CDs or DVDs is more than our most valuable item but I'd have no chance of trying to come up with an inventory for them because a lot of them weren't bought online.

So it's easy for me to recall our furniture and most expensive electronics, but most of the value is tied up in smaller items that are difficult to remember.

As for the concept of insurance, I'm with Jez for the most part in terms of not seeing the value in it HOWEVER that said I do have buildings and contents insurance (despite not having a mortgage) because it is quite cheap and we could suffer a loss due to circumstances outside of my control. This is in contrast to stuff like gadget insurance which makes little sense to me, if your phone gets broken you just buy a new one rather than forking out £100/year or whatever.

Bear in mind that some insurance companies run very high loss ratios as really they are just using insurance as a way to obtain capital for investment rather than actually basing their business around profits from core underwriting - the implications of this are that in some cases insurance can be quite 'fair' or reasonable value.

 

[b0rn2sk8]

See there's a good example, I've got the current 'big'falcon, but I know the older ones are worth way more than what they were new. So how much would a payout be for them?

It depends on the terms of your policy, as there is a new equivalent (but not the same) set available you might have to argue that one with the insurance co. It’s a collectors item which has a specific value for that version rather than something like a TV where you wouldn’t care if the model changed.

Not sure how much they go for these days, the single article limit might kick in if it’s not declared separately.

Haha, now that i am with you on(!) We have hundreds of sets including most of the large technic sets from the 80s/90s as well as most of the trains and city from the same period. The house i can live with risking (the value is in the plot and its not like a fire can ruin your footings and drainage, i'd almost relish the excuse to rebuild it!) but the Lego would actually be quite upsetting!

Some of those trains will be worth a mint at this point. Well worth holding on to those!

 

[mid_gen]

they were kicking themselves that they could have got better stuff as replacements.

Kicking themselves they could have committed fraud and potentially exposed themselves to losing the whole lot and not getting any payout, not to mention the prison time? Do wonder about people sometimes...

 

[thezappa]

Kicking themselves they could have committed fraud and potentially exposed themselves to losing the whole lot and not getting any payout, not to mention the prison time? Do wonder about people sometimes...

Lol. Not really the whole claim was well in to six figures so a couple of hundred on a sofa would have made no difference.