The concept of contents insurance. Replacement of things from insurance. How much to insure things for?

It is interesting when we get insurance, any form of insurance, we are advised by the person who is selling it to us.  Let's think about that for a moment.........

Lots of things in life are like that, salespeople are supposedly the experts in their field.  

In the 70s my dad was a mechanic, he also sold cars, the cars he serviced, so he was the expert, he knew about cars intimately!  Still does!  Things have changed dramatically, we now have specialist car sales people, that's all they do, they know a minimal amount about the actual mechanics of the vehicle and their only job is to sell it to you.  

Insurance sales people are the same as that.  At the end of the day, their job is to sell a product that "suits" you.  They are in the business of selling and that is how they earn their keep, we have to respect them for that.  

I was sold very high contents insurance,  I had it for many years.  I did a lot of research in this space and I guess the thing is, we are paying it for the "just in case".  Don't get me wrong, that is important.  I often think, if my house burned to the ground, and I lost everything, how much would it cost me to replace everything I have.  

Guess what?  I don't want to replace half of the stuff in my home.  In fact, it would be quite good to get rid of about 80% of it, I don't need it replaced.  I would love a far more minimal existence.

I have recently set up some fully furnished emergency housing units and a fully furnished bnb.  It was an interesting exercise for me, something I have never had or tried before.  Both of these ventures were furnished including linen and full kitchen and bathroom utensils for much less thank $10,000 each.  Hey, I did a bit of shopping around but everything, including linen and towels were brand new, I think I may have purchased a second hand fridge.  

So I thought, why they hell am I insuring my own personal contents for between $50,000 and $100,000??  What possible reason would I have for thinking I need that much insurance?

When I was sold the insurance I was asked to think of the value of things like my engagement ring and jewellery and china that was my grandmothers.  Hmmmph, when I think about things like that, no matter what they are worth, if they are stolen or burnt I can never ever get that same item back.  No amount of insurance could get them back with the sentimental value they have to me.

I think you should ask yourself, not how much it would cost to replace what you have, but how much it would cost to set yourself up again.  

It is an interesting concept and change of thinking.  

By dramatically reducing the total insured for your contents you can dramatically reduce what you are paying each month or each year.

When you do the calculations it may not seem like much, like going down from $80 per month to $50.  I would then ask yourself the question:

"If you had $30 per month to donate to a cause, would that cause be an insurance company???"  

or

"How much difference would that $30 per month make to your mortgage if you added it onto that payment??"

I would challenge you to change your way of thinking and adjust your insurance payments.  At the same time make sure that any money you are saving goes either against your mortgage or your kiwisaver so it doesn't get lost in the weekly whirlpool that swallows up any extra money.  You will be blown away by how much difference it makes, I would love to hear in the comments when you see how many years or interest dollars or both you can save.

Also my excess was very high, $1000, I could surely reduce that.  Most of this time my contents claims are small things, like cellphones or stolen handbags, so it is important to be able to claim as these are things I certainly can't do without for long.  So I think reducing the contents excess down low is very important.  Remember, I am only talking about Contents Insurance here, not House Insurance that will be in a further blog.

I remember when I had my handbag stolen off my desk at work.  It had a cheque book in it and, yes, I know there is no such things as a cheque anymore, but I phoned the 0800 number at the bank and cancelled the cheques.  Even so this delightful person had gone through my purse, got the cheque book and forged my signature beautifully, better than I could do myself and cashed the cheques at my bank in my small town.  I was truly devastated, and while the insurance company were great, by the time I had quoted replacing everything including the stolen cheques, my $1000 excess and loss of my "no claims discount" added up to more than the claim.  So I ended up not claiming at all.

So remember a few tips on this.

• Reduce your contents insurance "sum insured" to a lower amount, even to the minimum that the insurance company will allow
• Reduce your excess to a lower amount
• Claim when you lose or break something, that is what insurance is for.
• Any savings you make put towards your mortgage payment or your kiwisaver where it will grow exponentially for you!

I have so many tips and trick in this space.  Keep an eye on my blog and follow for more tips.  Contact me through this blog or my website if you would like further advice.  Let's stop funding the big guys and start to get ahead ourselves.   

Have a fabulous day out there, remember every day is a true gift!