As the years pass, our belongings change according to our life situation. As families grow, so does the amount of things we own or inherit from relatives. However, while our possessions are very dear to us we often do not know their true value. When setting up an insurance policy it is possible to throw out educated guesses about what contents are worth, but without a trained eye, it is very easy to under or over estimate the true value of the contents in our homes.
What is the best way to resolve that issue?
An independent appraisal report. Not only does an appraisal report provide an accurate valuation of your possessions, it can also save you money. Simply put, an appraisal report can help you avoid situations of over and under insurance.
What is “over insurance”?
Over insurance is when a person has over estimated the value of the contents in his home. The insurance company will only pay out according to the loss adjuster’s report in the event of a claim, which reflects the true value of the contents in the home. Insuring yourself for more than the true value will only lead to needlessly paying a higher premium for the same level of coverage that you would have received with an appraisal report. By having an appraisal report you will pay a premium according to what you have, and as a result not waste money on over estimated sums.
What is “under insurance”?
Under insurance is a situation you do not want to find yourself in if you have an insurance claim. Under insurance means that you have insured your contents for less than their true value. If for example, you have insured your general contents for 100,000 NIS when in reality they are worth 200,000 NIS, you have in essence under insured by 50%. In the event of a claim, the insurance company would only pay out the relative amount (in this case, half of the value). That means that if you had a dining room table whose value was 20,000 NIS and was damaged in a fire, according to the scenario above, the insurance company would only pay out 10,000 NIS for the damages caused, reflecting the 50% under insurance. To ensure that you are covered correctly and that a claim would be properly compensated for, an appraisal report is crucial in order to avoid this happening.
How does an appraisal report solve this issue?
The appraisal report offers a detailed list of items in the home, eliminating estimates and guesses from the equation. The insurance policy and the premium are then adjusted according to the report, allowing for little room for the insurance company or the insured to dispute the value of the contents in the event of a claim. One should be aware that the appraised value is based on “new for old” (replacement) value according to Israeli retail prices.
What if I don’t agree with the figures listed in the appraisal report?
As mentioned it is important to keep in mind that the appraisal report reflects the replacement value of the items in your home according to Israeli retail prices. That means that the “second hand” outdoor furniture you may have purchased for 500 NIS may be listed as 1200 NIS, which would be in line with the retail price for a new item.
There are however, certain items that can be insured for an agreed value such as artwork, jewelry, etc., where one can insure specific pieces for a lower agreed sum insured. The reason one would consider insuring valuable items at a lower agreed value is to lower the premium while maintaining a reasonable sum insured in order to replace the item, albeit for a lower value piece.
Can I opt for an agreed value on regular contents in an effort to lower the premium?
Simply put, no – doing so would lead to under insurance.
The best way to lower premiums, while accurately insuring your contents would be to look into the option of a higher deductible/excess in the event of a claim.
How frequently should I reappraise my contents?
Since the items in your home can change over the years and the value of precious metals can change, it is highly recommended to have an appraisal done every three to four years. Many companies will offer this for free. Should one purchase new items between appraisals, or conversely remove items from their home, it is possible to update the policy by informing your agent and by sending a copy of the proof of purchase. This ensures that the policies have been updated accordingly, and reflect the items either purchased or no longer owned by you.
What other advantages are there to having an appraisal report?
In the unforeseen event of a claim, an appraisal report will ease the process by removing the onus from you to prove that the items were in your possession as they will be clearly listed in the report. As such, the claims process will be complete in a far more efficient manner. Even though it may not appear that way, an appraisal report can be one of your most valuable assets.
Ronen Goldman is the Director of Marketing & Customer Relations at Goldfus Insurance. For more information about home and contents insurance contact www.goldfus-ins.co.il.