What Is The ‘Single Item Limit’ On Your Home Insurance?

As a home owner, you'll need to take out home contents insurance to cover your possessions in the event that you suffer loss as a result of theft or damage.  However, many insurance companies place a 'single item limit' on their home insurance plans, which could mean that your most expensive items are excluded.  So how do you ensure that you don't lose out?  Read on for more information.

How does a 'single item limit' work?

Home insurance policies cover your possessions up to a maximum amount (the sum insured).  This means that you could claim up to that sum insured in any one incident.  However, a single item limit means that you could only claim up to a certain amount on any one item.  For example, if your single item limit was $1,200, but your diamond necklace was valued at $2,500, you couldn't claim for its full value on your house insurance if the necklace was stolen because its value exceeded the stipulated limit.  In fact, you would only be entitled to claim $1,200, leaving you $1,300 out of pocket.

Some insurance companies also put a maximum limit on their policies for all valuables.  So if this maximum limit was $5,000 and you were burgled, the most you could expect to receive for your valuables would be $5,000 in total, with a limit of $1,200 for one single item.  From this scenario, it's easy to see how you could be left out of pocket.

Do you own any 'valuables'?

It can be easy for the unwary to fall victim to the single item limit simply because they don't think that their possessions count as 'valuables'.  However, the following common household possessions are all viewed as valuables for insurance purposes:

  • jewellery
  • designer clothing
  • laptops, smartphones and other tech
  • sound systems
  • antiques
  • musical instruments
  • bicycles
  • collectables

From this list, it's easy to see how you could be caught out by the single item limit.

It's important that you check your home insurance policy to see if it has a single item limit imposed under the terms.  If any of your individual valuables exceed this sum, ask yourinsurance broker to add them to the policy as 'specified items'.  Although you may have to pay a slightly higher premium, this ensures that the items are covered up to their full value, regardless of the single item limit.  Remember to have any new valuables that you purchase added to your existing policy so that you are fully covered.