Insurance Assumptions

Each year when our house and contents renewal comes in the amount allocated to contents has increased by about 3-5%.

I don’t think its that our stuff has appreciated in value… as if… Rather there is an assumption that as each year goes by we will buy more stuff. Its a bizarre assumption because sooner or later you must have enough… or more than enough even…

I have watched it happen unquestioningly over the last few years and only begun to ponder it this year as I looked at the ‘insured amount’ and did a quick scan around the house and an estimate of the contents.

We rarely buy new stuff and have also had a fairly decent purge lately so the real value of our stuff is probably about half of what was estimated.

I ‘get’ that replacement value is higher, but even then I think we would be way overinsured. So its time to reign it in and recalibrate it to a more normal and reasonable amount.

Crikey at the rate we are assumed to be purchasing we would own a ludicrous amount of stuff in 20 years time.

When it came to the ‘housing’ component of the policy we had one company who could not insure our home for less than $550K. At that amount I’d be tempted to burn the whole thing down just to get the payout! Given we paid just $560K for house and land it seems like a bit of a wacky estimate – even given demolition and associated costs.

In the end we have decided to go with the Commonwealth Bank for house and contents both for price and quality of product. They came in at $870.0 P.A while my renewal from GIO was $1400.00 What really made me mad with GIO was that they instantly gave me a $120.00 discount when I rang to enquire about the amount. Obviously there is a buffer in the renewal sum based on the assumption that most people won’t bother calling but will just cop the hit.

I hate insurance.

1 thought on “Insurance Assumptions

  1. Suspect you are just looking at the CPI allowance for replacement costs, but if it prompts you to revisit all of your information, then more power to you.

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