Probate Valuation vs Insurance Valuation: What's the Difference?
One asks what an item would fetch, the other what it would cost to replace. Using the insurance figure for probate can overstate an estate badly.
Somewhere in the paperwork there is usually an insurance schedule with figures on it, and it is the most tempting document in the house. The numbers are already written down, somebody professional produced them, and you have a form asking for values. It looks like the job is done.
It is not, and using those figures is one of the more expensive shortcuts an executor can take. The two valuations answer completely different questions.
This is general information rather than advice on a particular estate, so do put your figures past whoever is handling the account before they are submitted.
The two questions
An insurance valuation asks: if this were destroyed tomorrow, what would it cost to put right? That means buying a replacement, at retail, today, from a shop.
A probate valuation asks: what would this have fetched if sold on the open market on the day the owner died? That means what a buyer would actually have handed over for that specific secondhand object.
Replacement cost and resale value are not close to each other. For jewellery they can be worlds apart, because the retail price of a ring includes the shop's margin, the setting, the workmanship and the box, none of which a secondhand buyer pays for. For furniture the gap is wider still.
| Insurance valuation | Probate valuation | |
|---|---|---|
| The question it answers | What would it cost to replace? | What would it fetch if sold? |
| The market it looks at | Retail, buying new or equivalent | Open market, selling secondhand |
| The date it uses | Today, and reviewed periodically | The date of death, fixed |
| Who it protects | You, against loss | The estate, and the beneficiaries in it |
| Typical relationship | The higher figure, often by a lot | The lower figure |
What goes wrong when you use the insurance figure
You overstate the estate, which sounds harmless and is not.
Where an estate is near the inheritance tax threshold, an inflated contents figure can push it over, and the estate pays tax on value it never actually had. Where there is already tax to pay, every inflated pound is taxed. And where the contents are then sold for what they are genuinely worth, you are left explaining a large gap between the figure you declared and the money that came in, which is an uncomfortable conversation with no upside.
It also causes trouble between beneficiaries. If a ring is recorded at its insurance figure and one beneficiary takes it as their share, they have taken far less than the paperwork says they have. That is a real unfairness dressed up as a clerical decision, and it tends to surface later rather than sooner.
When the insurance schedule is genuinely useful
Do not throw it away, because it does two things well.
It proves an item existed, was described, and was thought worth insuring. If a specified piece appears on the schedule and cannot be found in the house, that is something to resolve now rather than discover later. And it flags where to look. Anything specified individually on a household policy was considered notable by somebody, which is a useful shortlist of the items that deserve a proper opinion.
The probate form itself asks whether the general household goods were separately insured, and asks for the policy where they were, so it is a document you may need to hand over anyway. What it is being used for there is corroboration, not valuation. The full detail of what the form asks is in what HMRC actually requires for house contents.
Getting it right when you commission a valuation
Ask one question before anyone starts: what basis are you valuing on? The answer you want is open market value as at the date of death. Any competent valuer will confirm it without hesitating, and it should appear on the face of the written report.
It matters because the same valuer, looking at the same ring, will produce two very different numbers depending on which job they were asked to do, and both will be correct. Reports get commissioned for probate and prepared for insurance more often than you would expect, usually because nobody said which was wanted. If the report you receive does not state its basis, send it back and ask.
The broader question of whether you need a paid valuation at all, and where a professional opinion earns its money, is covered in what a probate valuation is and whether you need one. The related errors that cluster around this one are in common mistakes executors make when valuing house contents.
The useful thing about the lower number
Understanding that probate value is resale value changes how the next decision looks. Once you accept that the contents are worth what somebody would pay for them rather than what they would cost to replace, the question becomes practical: how do you get somebody to pay it?
That is a matter of finding real buyers and letting them see the goods, which is what a priced contents sale is for and what a skip is not. The honest comparison of every route, including where clearance is the right answer, is in selling house contents after probate.
If you have a house of contents and no clear sense of what they would realistically fetch, you can talk it through with us with nothing to commit to afterwards.
Common questions
Can one report cover both purposes?
A valuer can supply both figures for the same items, and for high value jewellery that is often sensible if the piece is being kept and needs insuring. What cannot happen is one number serving both jobs, because they are answers to different questions.
How big is the gap in practice?
It varies far too much by item type to put a single ratio on, and anyone quoting you a fixed multiple is guessing. It is widest where the retail price carries a lot of margin and workmanship, as with jewellery, and on ordinary household furniture, where resale value is a small fraction of replacement cost. It narrows for things with a strong secondhand market of their own, such as vehicles and some antiques.
What if the insurance schedule is the only record I have?
Use it as a checklist of what to value rather than as the values themselves. Work through the specified items, establish what each would realistically fetch secondhand, and keep a note of how you got there. That is a proper valuation. Copying the column across is not.
Should I keep insuring the contents during probate?
Almost always yes, and tell the insurer the property is unoccupied, because most policies treat an empty house differently and cover can lapse without anyone meaning it to. That is an insurance question rather than a valuation one, and worth a call to the insurer early rather than late.
