There are all sorts of occasions when the value of the items in your home may increase.

Perhaps Santa was particularly generous and treated you to some new electrical goods, or you’ve just got married and have a host of gifts from friends and family. Alternatively, you may be preparing for a new baby and have splashed out on the many gadgets that parenting books will tell you are now essential.

This can pose a financial problem though; will your new possessions be covered by your home insurance policy?

When you take out contents insurance, you need to set a specific value for your policy. But if your possessions are now worth more than the value of your policy, then you face the risk of being under-insured. This could be problematic in the event that you need to make a claim.

Why under-insurance is a problem

If something happens and you need to make a claim - perhaps because of a burglary or a fire - then being under-insured will hurt the amount you can get back from your insurer.

Insurers have a number of options here. One is to ‘apply average’. This is where they only pay out a percentage of the cover you have taken out, based on just how under-insured you are. So for example, you may have £70,000 of cover but £90,000 of possessions. If you do need to make a claim, you may not be able to get the full £70,000, but instead see that payout figure reduced in line with your underestimation of the value of your possessions.

That’s not even the worst case scenario either; an insurer could opt to void the policy entirely, leaving you completely out of pocket.

Getting the right level of cover

The simplest way to ensure that you have a sufficient level of contents cover is to go through each room in your house with a pen and paper. Take a note of what’s in each of those rooms and how much it would cost to replace them. Don’t forget to include things like curtains and furniture - if it isn’t part of the actual building itself, then you need to include it in your tally.

Only once you have covered every room will you have the final figure that you need to cover.

Insuring individual items

The total cover figure is only part of the story though. Your home insurance policy will also have a single item limit. As the name suggests, this is the maximum amount that your insurer will pay out to replace a single item. If you have individual possessions that are worth more than that sum, then it’s a good idea to speak to your insurer and get the items listed separately within the policy, alongside its value.

It may push up the cost of your premium slightly, but it will mean that these items are properly covered by your policy.

It pays to review

It’s a good idea to review your exact level of contents insurance each year when sorting out your home insurance policy. Don’t just take it for granted that your cover needs are unchanged; it could save a lot of heartache later on.