Contents insurance is actually part of the broad category known as house or home insurance. Those interested in taking out a policy need to understand just what it covers, and how it differs from buildings insurance and comprehensive policies.
Contents insurance belongs to the broader category of “home insurance”. It is in fact very different from buildings insurance. The purpose of this cover is to protect the valuables that you keep in the home. These include furniture, appliances, expensive valuables and more.
In most cases, these policies also cover loss (such as through theft) or damage (such as flood or fire).
The other type of home cover plan is building insurance which specifically covers the actual structure of the building.
Contents insurance cost and what it covers
The point of contents insurance is to protect your belongings. Especially belongings you consider valuable. The ABI carried out a study in 2015 to investigate how much the average contents insurance policy costs in the UK. They discovered that it is about £124 per year – which isn’t really much.
So, what exactly does this kind of policy cover? Well, it generally includes:
- Items such as clothing, furniture or jewellery. Basically, items considered expensive or necessary.
- Electrical goods: in particular, laptops and cameras. Most electrical goods are covered, though.
With contents cover, there are plenty small subcategories. The specific details differ depending on policy. Some have optional extras such as “accidental damage cover” – so review your policy and never assume that it is included. Another extra includes “personal possessions cover”. This covers items you take out of the house. Examples include:
- Mobile phones
Depending on the contents insurance policy, you’ll get cover for your possessions even while you are abroad. This means you can claim your things back on insurance should they be lost or damaged.
Contents insurance – The pros and cons
Contents insurance isn’t seen as necessary or vital as health or car insurance. But it’s still pretty important – especially for what you consider necessary or valuable. Before searching, consider the pros and cons:
- Pro: Customers can pick a “new for old” policy which replaces damaged or lost items.
- Pro: Personal possessions cover allows you to claim back on items that you take out of the home such as cameras, jewellery and laptops.
- Pro: Certain contents insurance policies can include a legal helpline which will advise you concerning personal legal matters such as employment and taxation.
- Con: You will have to pay an “excess” on each claim. If you claim then your premium will likely rise the following year. Before signing, be sure that you are comfortable with an excess on your policy.
- Con: The terms and conditions of the policy you take out must be understood in full. You should also be aware of any exclusions (possessions the policy doesn’t cover) so you know what you can claim for.
- Con:A lot of policies are limited when it comes to the amount of cover, so make sure that the amount is sufficient.
What a good contents insurance police looks like
When buying contents insurance, customers need to ensure that they have the right amount of cover. If you end up getting too much, you’re simply wasting money. However, getting too little may mean that the company doesn’t give you the pay out that you need. Always make sure to check your policy!
Types of contents insurance policy
When it comes to contents cover, you often encounter three types:
- “Bedroom rated” – The “sum insured” (amount of contents cover) which the insurer works out. This is based on how many bedrooms you have. The particular advantage with this kind of policy is that customers don’t need to work out how much insurance they require. In general, bedroom-rated policies cover between £40,000 and £50,000. For most homes, this is enough. However, make sure that it will also cover your possessions!
- “Sum insured” – This means that it is up to the customer to calculate the amount of contents cover that is needed.
- “Unlimited sum insured” – You can get all the contents of your home covered, without limit. This is best if you want to completely avoid being uninsured.
Just what is the right amount of cover?
For customers who don’t go for “bedroom-rated” or “unlimited sum insured” contents insurance policies, the amount of necessary cover will have to be calculated. There are plenty of online calculators that can do this for you. You must simply list your possessions, add up their estimated replacement coste and then replace these prices with current prices. Keep in mind that items like household linen and clothing (sheets, towels) will need to have their value adjusted downwards when considering wear and tear.