The average value of items in a UK home is estimated to be around £40,000, so most people couldn’t afford to replace all their belonging without any financial help. Contents Insurance is there to make sure you wouldn’t have to come up with the cash yourself, and for smaller losses or damage too. Whether you’re a homeowner or rent where you live, knowing that possessions which may have taken a lifetime to accumulate are protected brings reassurance and peace of mind.
What is contents insurance?
If you imagine you could pick up your home, turn it upside down and gently shake it, contents insurance covers everything that would fall out (as opposed to buildings insurance, which is there to cover what remains – see our guide to buildings insurance).
What contents insurance covers
In insurance terms, ‘contents’ refers to everything that’s not fixed and which you could take with you if you moved. Most contents insurance policies cover the things you own if they are lost, stolen or damaged; whether that’s by water damage and flooding, fire, storm, lightning, moving vehicles (or objects), third parties or theft. However, if the damage is caused by yourself , such as the classic example of spilling red wine on an expensive carpet, you’ll need to make sure ‘accidental damage’ cover is included in the policy (see further on in this guide under ‘What is accidental damage cover?’).
What is new for old?
The majority of contents insurance policies these days provide cover for your possessions on what’s known as a ‘new for old’ basis.
How does new for old cover work?
‘New for old’ is what most people require when taking out contents cover. It ensures that if you make a claim you’re compensated sufficiently to exchange items for the exact same, new version; or at least the latest equivalent if the item’s range is no longer available. So if you’re claiming for an old television only worth £100 second hand, for example, you’d get a brand new model of a similar specification to the old model. Beware, however, that some of the cheapest policies might only offer ‘wear and tear’ cover, or indemnity cover as it’s also called, which only values an item based on the condition it was in at the time of the claim. This means that if you claimed for the same second hand TV valued at £100, for example, you would only receive its equivalent replacement, or £100 cash value, rather than a brand new version.
What is covered?
Items most policies typically cover include:
- Furniture, including sofas, wardrobes, beds, desks etc.
- White goods such as fridges, freezers and cookers
- Laptops and computers
- Electronic devices and gadgets such as smartphones and tablets
- Valuables, including jewellery, antiques and musical instruments
- ‘Moveable’ fixtures and fittings like carpets, curtains, rugs and light fittings
- Items in transit may be included such as frozen foods and furniture
What is away from home cover?
‘Away from home’ cover does what it says on the tin; it means that your possessions are not just covered in the home, but also when you’re out and about anywhere in the UK. Some policies also extend cover for when you’re abroad too. It doesn’t come as standard with all policies, but may be included depending on the insurer and how much you pay. If it isn’t, away from home cover can usually be added for a small additional cost. All the usual places where people typically have things stolen or damaged are included, from bars and restaurants to cars and public transport. However, you are expected to be somewhat careful; not leaving things unattended for too long (if at all), for example, or in cars with open windows. Otherwise, you may find any claim you make is rejected.
What is covered?
Away from home cover is ideal for those with busy lives, who perhaps need to carry a lot around with them. On an average day, with all the smartphones, tablets and laptops people now own, not to mention watches and jewellery, people can have thousands of pounds worth of items in their possession when out and about.
How much cover is available per item?
Most deals which offer away from home cover have single item claim limits of up to £2,000, but this can be much more depending on the policy and how much you agree it to be with an insurer. Typical items you might want to make sure are protected by away from your home (whether the policy offers it as standard, or if you’re considering adding it) include:
- Handbags and their contents
- Smartphones and mobile phones
- Jewellery including rings, earrings and bracelets
- Clothing and footwear
What needs to be specified?
The insurer needs to be told of any valuables you’re likely to take with you when you leave your home which exceed the away from home cover single item claim limit. As mentioned above, this is likely to be £2,000, but it’s always advisable to read the small print and check with the insurer. Such items might include:
- Engagement and wedding rings
- Watches of high value
- Collectible coins and stamps
- Necklaces, earrings and bracelets of high value
What is accidental damage cover?
Accidental damage, as you would expect, refers to a one-off incident which causes damage of some sort to the contents of your home. Accidental damage cover is designed, therefore, to protect you financially against the sort of unintended mishaps which can occur. While contents insurance policies cover your possessions from damage that isn’t deemed to be caused by ‘accident’, such as a fire or theft, it’s generally only policies of a higher quality which let you claim for damage that is. And although most standard policies make allowances for some sort of accidental damage, it tends to be very limited in scope and you’ll need to pay a little extra for full cover. If you then dropped an expensive vase out of clumsiness, or flushed a valuable earring down the loo, you could be sure you would be able to claim for the financial loss caused. It’s worth noting that general wear and tear, or damage that occurs gradually over time, is excluded.
What’s covered under standard contents cover policies:
- Fixed glass in furniture
- Damage caused by leaks
- Ceramic glass in cooker hobs
What’s covered by extended cover
- Electronic items such as televisions and laptops
- Spillages including those on sofas, curtains, carpets, rugs etc
- DIY disasters
- Children breaking and damaging things
- Furniture such as wardrobes, chests of drawers and dining room tables
- Lamps and other lighting effects
- Paintings and antiques
What exclusions should you be aware of?
Insurers won’t cover all types of accident however; much depends on what caused the accident and the circumstances behind it. Most accidental damage cover excludes the following:
- Some types of sports equipment are not covered, especially away from home
- Pet damage
- Damage through wear and tear
- Defective workmanship
- Mechanical failure
- Cleaning or repair damage
Valuing your contents and how to get items valued
It’s crucial you accurately estimate the value of your home’s contents. Many people under-estimate how much it would cost to replace their possessions by thousands of pounds, and are then left out of pocket if they make a claim. The sum you arrive at out shouldn’t be less than the total maximum claim limit on your policy. Remember, your estimation shouldn’t be worked out on the current value of items (i.e. their second-hand value), but how much it would cost to buy the new, equivalent replacements.
Single item claim limits and specified items
Contents insurance policies have limits on the maximum you can claim for any one item. For most standard policies this figure will be in the region of £2,000, but it varies by insurer and policy. If you have any items that you think are worth more than this amount, you need to tell your insurer. The insurer may need to adjust your premiums by a small amount to take into account the number of items you own over the single item claim limit to ensure you’re fully covered. It may be that you own items which are so valuable or delicate that you need specialist insurance for them.
Total claim limits
As with single items, there are also maximum limits for when you claim for multiple items. For example, if you were robbed and had £40,000 worth of items taken, but the maximum claim limit on your policy was £35,000, you would be left £5,000 short (minus the excess you have to pay – see further on in the guide under ‘Policy excess’). This is why it’s so crucial you work out reasonably accurately the total worth of your possessions. You can then compare the figure with the claim limit on any policy you’re getting a quote for, or your existing policy’s limit (which might need changing!).
Valuations can prove useful not just to find out how much an item is worth, but also if it comes to making a claim. With the price of gold, silver and other precious metals, as well as antiques, art, fine wine and other collectibles having risen considerably in recent years, valuations could certainly be a good idea, unless you want to under-insure yourself and lose out if you have to claim. Get independent valuations from several sources and keep the valuations safe. They could prove useful in the event of a claim as they help prove an item was in your possession in the first place. If you don’t know where to go to get a valuation, get in touch with your insurer which should be able to make recommendations.
As with most insurance policies, you’re expected to pay out the first part of any claim. This is known as the policy ‘excess’. There are set minimums and maximums to the excess payable on most contents cover policies, usually £50 at the lower end and £500 at the top end. In between this range you can tell the insurer how much you’d like your excess to be. If you choose a higher level of excess, the premiums on the policy should then be lower than if you choose a smaller excess. How to get cheaper contents insurance It’s nearly always cheaper to buy your contents insurance alongside your buildings insurance as a ‘packaged’ home insurance deal (assuming you need buildings insurance as well, that is). Home insurance is the catch-all name which refers to both contents and buildings insurance when provided under the terms of the same policy. Insurers reward you for taking both out through them by lowering the combined cost, as opposed to what you’d pay if you took out policies individually. There are a number of ways of ensuring you get the best deal, here are some tips:
- Compare deals by shopping around – It goes without saying that you should shop around and get a number of different quotes for your contents insurance, or home insurance deal. It’s easy to use online comparison tools or contact a broker such as Policy Expert.
- Exclusive deals – At Policy Expert we work closely with the best contents insurance providers and we can offer you exclusive deals that you won’t find anywhere else. We always check the standard contents insurance policy elements our insurers offer to make sure they’re of a high standard.
- Higher security, lower premiums – Insurers reward those whose homes have a high level of security as it makes it less like you’ll be broken into and they’ll have to make a pay-out. Discounts are often available to those with British Standard locks on doors and windows and higher quality alarm systems.
- No claims discount – If you haven’t made a claim in recent years, you should have built up what’s called a ‘no claims bonus’. This manifests itself as a discount on the level of premium you would otherwise pay for your contents cover. Ask around at renewal time, or if you’re looking for home insurance for the first time, and compare discounts on like-for-like policies.
- Pay up front – It will generally cost you less if you pay up front in one go for your annual home cover rather than on a monthly basis.
- Don’t pay for cover you don’t need – Some insurers include cover elements as standard which others may only offer as ‘add-ons’. This might be boiler cover, legal expenses or extra outbuildings insurance. Whatever the additional cover, you might not need it. Ask for anything you feel is surplus to your requirements to be removed and a new quote provided.
- Avoid paying for dual cover – You may find you’re covered for certain elements of your home insurance in other ways. Some bank accounts or credit cards now offer away-from-home cover for you possessions, for example, or legal insurance. Again, if you already have such cover, ask the insurer if they can provide a re-quote having removed the elements you don’t need.