How accurate does the estimate need to be?
The estimate needs to be as accurate as you can possibly get it. If you overestimate the value of your possessions, then you’ll end up taking out more insurance than you need and paying a premium that’s too high. An insurance provider will never pay out more than the actual value of your possessions.
If you underestimate, then you could find out that the payout you receive doesn’t cover the full amount of your loss. This is because insurance providers can reduce any payout by the same degree to which you underestimated the value of your possessions (this can happen if you have an ‘average clause’ in your contents insurance policy).
For example, if you estimated the value of your possessions at £20,000 when in fact it was £30,000, you’d be underinsured by a third. So, if you suffer a loss of £3,000 and claim for this amount, your insurance provider would reduce the payout by a third and only give you £2,000.
According to the Association of British Insurers (ABI), one in five UK households could be underinsured because they just don’t know how much their home contents are worth.