You file a claim after a burst pipe or a burglary, and then comes the unpleasant surprise: the insurer only pays a fraction of what you expected. The reason is almost always the same, the sum insured was set far too low when the policy was taken out, often without anyone noticing.
The flat rate: convenient, but often set too low
When you take out household contents insurance online, many comparison portals suggest a sum insured automatically, usually a rough flat rate of around 650 to 700 euros per square meter of living space. That sounds practical, but it has nothing to do with what you actually own. Whether you live in a sparsely furnished student flat or an apartment with a fitted kitchen, a designer sofa, and expensive home office equipment makes no difference to the flat rate, but it makes a huge difference to the real value of your contents.
What underinsurance really means in a claim
If your sum insured is lower than the actual value of your household contents, you face two distinct risks: without a waiver of underinsurance (or if the living space was stated too low), the insurer reduces the payout proportionally under § 75 VVG on every single partial claim, not just a total loss. If a waiver of underinsurance is agreed via the flat rate, partial claims are not reduced, but maximum compensation remains capped at the insufficient sum insured. As I explained in the Cheap Trap in Private Liability Insurance, the cheapest-looking option often turns out to be the most expensive once a claim actually happens. With household contents insurance, these items are particularly often underestimated:
- Electronics & home office: Laptop, monitor, printer, and network gear add up to several thousand euros quickly.
- Fitted kitchen & higher-value furniture: Especially in rented flats where you brought it yourself, and often worth more than assumed.
- Clothing, jewelry & watches: Accumulated over years, but rarely factored into the total.
- Children's rooms: Furniture, toys, and equipment grow along with the kids and are usually missing from the original estimate.
Did you know?
A worked example: at 80 square meters and a flat rate of 650 euros per square meter, you have 52,000 euros insured. If your contents are actually worth 80,000 euros, there is a 28,000 euro shortfall. Without a waiver of underinsurance (or if the living space was stated too low), you are 35 percent underinsured and the insurer reduces every partial claim proportionally to 65 percent under § 75 VVG: for a 10,000 euro water damage claim, it pays just 6,500 euros. With a waiver of underinsurance via the 650 euro flat rate, partial claims are paid in full, but in a total loss (such as an apartment fire) the payout is capped at 52,000 euros, leaving you with a 28,000 euro gap.
3 steps to the right sum insured
- Estimate room by room: Go through each room individually and note the approximate replacement value of furniture, electronics, and valuables, instead of relying on a flat rate.
- Agree on a waiver of underinsurance: That way the insurer no longer checks whether your sum was set too low when a claim happens, and pays up to the full agreed amount.
- Update it regularly: After major purchases, a renovation, or a growing family, the sum insured should be adjusted.
As your fiduciary representative, I help you assess your household contents realistically and find a policy with a waiver of underinsurance, so the full sum actually gets paid out when it matters. You'll find full details on coverage, bicycle protection, and common questions on the household insurance overview page, including an inventory calculator to work out the real value of your contents.
Checklist: Is your household contents insurance covered enough?
- Do you know the actual replacement value of everything you own?
- Does your policy include a waiver of underinsurance?
- Has the sum insured been updated since your last major purchase?
- Do you know how much a proportional underinsurance cut would reduce your payout?