Contents insurance isn’t compulsory, but it offers valuable protection for your belongings in the event they were stolen or damaged. What would you do if you lost everything in your home? Buying everything again would cost a fortune so contents insurance is vital if you’re going to cover yourself for unexpected events like a burglary or a fire.
If your things are damaged or stolen, get them repaired or replaced quickly. You can insure individual valuables in your home – let us know your requirements and we’ll quote accordingly.
Contents insurance covers your home contents against loss or damage by theft or attempted theft, fire, explosion, lightning or earthquake. It will also insure against water leakage, storm or flood damage.
Insurers define ‘contents’ as the sort of things you would take with you if you were to move house, including furniture, clothes, electrical items, money and jewellery. Contents insurance also covers some fixtures such as carpets and curtains.
There are broadly two types of cover. Most policies these days are ‘as new’ or ‘new for old’, which means that if something is damaged, the insurance will pay the full cost of repair. If something is stolen, the payout will be enough to buy the equivalent new item. Check the policy details, though, as some items, usually clothes are not covered on a new for old basis.
You can choose an indemnity policy instead. Indemnity policies are cheaper because any payout is reduced to take into account wear and tear or depreciation in value. For example, if your five-year-old laptop is stolen, the claim will be based on its current value, not the price when it was new.
The ‘sum insured’ is the maximum amount the policy will pay out if the contents of your home are completely destroyed, so it is important to get the figure right. Unfortunately, many of us get it wrong. Experts estimate that one in five households could be underinsured because they do not know the true value of their home contents.
It can help to go through your home room by room and make an inventory of your possessions – they will probably add up to more than you think. Don’t forget to include items that are in the loft or stored outside in the garden and shed.
Some insurers calculate the sum insured according to the number of rooms in your home. It means you don’t have to worry about working out the value of your possessions, but premiums can be higher – and of course the sum insured could still be inadequate.
There are usually limits on the amount that insurers will pay out for high value items, such as works of art, jewellery and some expensive electrical equipment. You should always check the limits and negotiate a higher maximum if necessary.
Make sure the sum insured is kept up to date. Your insurer might link the policy to inflation but you would need to contact the firm if you splash out on a particularly valuable item. Some policies are flexible and increase the level of cover at Christmas when you might have expensive gifts in the house. You might also need to check that your contents insurance is adequate to cover any generous wedding gifts if you have just got married.