There are many reasons your assets might be significantly underinsured. These include letting your valuations lapse, not accounting for their international market value and poorly designed insurance policies. Here, we walk you through the perils of personal asset valuations – and outline strategies to help protect your most prized possessions.
When it comes time to make an insurance claim, you expect to be put back into the same position you were before your loss occurred.
However, if your policy hasn’t been well thought through – and your asset valuations aren’t accurate or current – claim time can turn into a stressful and difficult experience, very quickly.
Aside from the extraordinary financial disadvantage you could face, the very personal nature of home and contents insurance means there’s often a lot of emotional value at stake too.
Try explaining to your parents that you can’t afford to repair your grandfather’s Aston Martin (that he shipped over from the UK all those years ago) because you have failed to keep up with current valuations.
You may not be aware of all the costs to replace your home or assets following a large loss.
For example, if you lost your house, have you considered the costs relating to demolition, architecture, groundworks and the actual build? And what if your property is heritage listed – or has features that only a craftsman can replicate? All these elements can add up substantially.
Imagine finding the sum insured only covers three quarters of the total rebuild costs.
Now let’s consider the classic car or motorcycle sitting in your garage. You might have had it valued for the current Australian market without realising that overseas auction houses can often fetch higher prices for certain models.
Finally, do you have high value collectables? Collections can be more valuable when sold together, rather than as separate pieces. Does your policy allow for the financial loss of losing part of a set?
Policy limitations: Personal assets are usually insured as part of a household policy. Most of the time, items such as jewellery, wine collections, artworks and collectable items are insured with either a limit per item – or a smaller total limit across all items.
Because of these limitations, the total of your personal assets may be underinsured. It’s therefore important that your policy specifies items with high values if it has low single item limits.
Asset value vs replacement value: As the house scenario above shows, a high value item can often be a lot more costly to replace than what it’s valued at.
You therefore want to avoid a scenario where your policy only covers the value of an asset – rather than the replacement value.
Outdated valuations: It’s likely you possess some prized possessions that increase in value every few years. If you haven’t provided your insurer with the updated valuation before you need to make a claim, the claim process can become unnecessarily arduous.
Despite these obstacles, it is possible to ensure you’re thoroughly protected – for both your financial health and peace of mind.
An expert broker can help you find the true value of your possessions, taking into account factors such as international market value and full replacement value. They will also help you understand the sub limits for certain items, and devise the correct strategy to cover your risks fully.
You also have the power to get updated valuations for important items, including jewellery, works of art and collectable items. Make sure these are passed on to your broker so they can be noted in your policy.
We are rigorous in our process, right from the start of our partnership with you.
First, we will review your existing policies and obtain an understanding of your risks and expectations. From there, we will provide recommendations to ensure you have adequate coverage in place.
We will also provide you with ideas and options to help minimise your insurance cost and tools to determine your correct building and contents value.
As the process moves forward, we will recommend credible valuers who insurers will accept and agree with.
Most importantly, we’re there with you through the life of your policy. So should you ever need to make a claim, we will work hard to help you achieve the best possible outcome.
At Austbrokers Corporate, we’re experts in navigating personal asset insurance. Our team has been partnering with high net worth individuals for over 50 years.
Let us work with you to minimise your risk – and give you peace of mind.