The aim of insurances is, in case of an incident like theft, fire- or water-damages, to return the insurance taker, as accurately as possible, in the same financial situation he has been afore this very incident. Therefore, exact values need to be insured to avoid under-insurance.

A Concrete Example

Family Smith's house was burgled last Saturday evening. Jewelry, cash, and clothes, worth 50.000€ have been stolen and paintings, desks, computers, and other equipment, worth 10.000€ have been destroyed.

Total loss: 60.000€

Furniture was assured for 25.000€ whereas, in reality, it had a total worth of 100.000€. If insurance companies elaborate such an amount, which they usually do, you're considered under-insured. In this example, 25.000€ out of 100.000€ means 1/4. Family Smith will be reimbursed by 1/4 of the total loss (60.000€), namely 15.000€.

Moral of the Story

Take some time to re-evaluate the insured amount of furniture from time to time. Estimating values of real estates (not furniture) could be even more serious.

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Degano Consulting is looking forward to helping you.