A Guide to Contents Insurance
When buying contents insurance, it’s important to check you have just the right amount of cover, not too much so that you’re paying more than you need, or so little that your insurer won’t pay out if you claim. There are different rules for high value items, and portable items to consider as well.
In this guide:
- What is contents insurance, and why is it important?
- How much should I insure my belongings for?
- What types of cover should I look out for?
- What extra cover can I get?
- How is insuring 'valuable' items different?
- How do I insure portable devices, e.g. mobile phones?
Contents cover (along with building cover) is an important part of home insurance. If your possessions are damaged, destroyed or stolen, contents insurance covers the cost of replacing them. It can cover anything that you would take with you if you moved to a new house - so basically everything that you want it to, including:
- Entertainment e.g. DVDs
- Kitchenware e.g. pots as well as microwaves and other appliances
- Electricals e.g. TVs, laptops, etc.
- Toys, antiques, ornaments.
- Clothes and jewellery.
If you don’t take out contents insurance, then you could end up forking out a lot of money to replace your valuables, which could end up being unaffordable. You should ask yourself, if you had to replace everything in your house after, say, a fire, would you be able to cover the costs?
So while contents insurance isn’t compulsory, it’s a sensible idea.
Try not to underestimate how much your possessions are worth. If you don’t insure them to a high enough amount, if you were to make a claim your policy may not pay out enough, or at all.
On the other end of the scale, overestimating their worth will needlessly increase your insurance premium, meaning that over time, you’ll have paid far more money than you needed to.
A ‘sum insured’ policy means you are covered for the contents that you believe you have- so you have to calculate this yourself. If you’ve got a good idea of how much your stuff is worth, then you could total it up yourself. For things like clothing and linen, you should adjust their value according to wear and tear.
Or, you have the option of a ‘bedroom rated’ policy, where your cover is based on the number of bedrooms you have. The insurer would normally offer cover between £40,000 and £50,000 worth of belongings, as standard. If this isn’t enough for you, definitely ask if you can increase your cover in some way.
Certain insurers offer ‘unlimited sum insured’ policy. This covers all belongings with no limit on the amount, so you’d know for sure that all the items you’d like insured are covered.
But with contents cover, you should still be aware of clauses like maximum single item values, and other exclusions to the things you are looking to cover. Always check the T&C’s, and be careful not to make assumptions, because different policies will have different specifications.
There are two types of cover available, and both impact on the price of your premium.
‘New for old’ means that you will be paid whatever it costs to replace your items- this is what most policies offer.
But some policies offer ‘indemnity cover’ instead. This means you will only get the current value of your belongings. For example, if your sofa needs replacing and you paid £1500 initially for it, you will only get what your old, worn one was worth, which might be £150.
Some insurers, for extra money, will over extra cover that isn’t part of a standard contents policy. The most common ones are:
- Accidental damage cover: for life’s unexpected mishaps- for example, if you forget your iPhone is in your back pocket and it ends up down the toilet.
- Legal expenses cover: this covers legal fees if you were to take a tradesman to court, or if someone were injured in your house and sued you.
- Home emergency cover: this means you would have a helpline for fast assistance if a pipe bursts, a window smashes, or you have a pest infestation.
First off, you should check your insurer’s definition of valuables, as this can vary a lot. Next, check the ‘single article limit’: this is the most that the insurer will pay out if you claim. For most contents policies, this is about £1,500, but can be as high as £15,000.
If you have a valuable that’s worth more than the single article limit (for example, an engagement ring), you need to let your insurer know- you’ll probably have to pay a bit more to get it covered. You should go through the process like this:
- Let your insurer know what high-value items you have.
- Provide them with proof of purchase and the items’ value, if requested.
- Make sure the items are all correctly listed on your policy document.
Some contents policies will automatically cover you for things that you take out of the house, like your phone and laptop, but you need to check this.
While your standard cover might include the cost of replacing your phone, you need to check if it will also cover stuff like music downloads or files that you’ve saved. Some policies will include cover for digital information, so it’s always worth a check.
Most policies won’t cover you if your phone or laptop break down, or any money you lose if someone steals your phone and runs up a bill.
Some insurers do offer an ‘all risks’ option. This is normally for a higher premium, which will offer wider cover, and include things like accidental damage.