Contents insurance covers you for loss, theft or damage of any item in your home that’s not part of the structure or the building. That could be your TV, your sofa, your computer or your clothing, for example.
It’s not a legal requirement to have contents insurance as it is with motor insurance. But if you consider how much you invest in your home contents over the years, most people consider their possessions an investment worth protecting. The average amount of stuff owned by an ordinary UK household is £35,000. That’s more than the average annual UK salary of £27,000.
Yet, the ABI (Association of British Insurers) says that over a quarter of households – 7.5 million – have no contents insurance. This adds up to their leaving possessions worth over £266 billion unprotected and at risk.
Your home contents premium doesn’t have to be costly. Research from the ABI (2017) shows the average contents insurance policy costs £139 a year, or less than £12 per month.
But there are tricks to keeping the costs down. When you take out your policy, there are several pitfalls to avoid to ensure you’re adequately covered and not paying over the odds.
How to Work Out Your Contents Value
Giving the correct ‘sum assured’ estimate is important, especially when considering a contents insurance policy which provides a number of different options regarding the level of cover offered. As a guide, if you are single at home or in a couple, the basic level – usually about £30,000 – will be enough. Most families tend to need more cover, however, often around £70,000
In order to be sure a Contents Insurance policy provides sufficient cover, you should consider each room in your home. Note down, or think of, the Contents you keep in each room. Things like sofas, white goods, TVs and other valuable items etc.
An important way not to pay over the odds is to determine which optional extras you really need for your contents insurance policy. Any add-ons can really add up… So it’s worth deciding what you genuinely need.
You won’t need Personal Possessions Cover if you don’t take valuable items e.g. jewellery or laptops away from the home. Also you should be careful not to opt for extra options such as cover for your boiler if this is already covered by a separate policy or if it would not be eligible for cover under the policy you are considering.
Below, we’ll give you the most common options:
New for Old Cover
Insurers will usually offer you the choice of ‘new for old’ or ‘indemnity cover’. The first means that if an item gets damaged beyond repair, your insurer will pay out to replace it in full. If that item is not longer available, they’ll give you the value of an equivalent. ‘Indemnity cover’ is more simply understood as ‘wear and tear cover’. It means that the insurer won’t give you enough to purchase a replacement item. They will calculate its worth in today’s prices and give you a sum to compensate you for the loss. Indemnity cover will reduce the cost of your premium but most people prefer the peace of mind of ‘new for old cover’. Many Home Insurance policies now offer ‘new for old’ cover as standard. You would be best advised to check on this before purchasing the policy.
Contents Outside the Home Cover
‘Contents outside the home’, if you tend to travel, either abroad or within the UK, is certainly worth considering. This will provide cover you for portable items such as laptops, cameras, jewellery, mobile phones etc most of us have today. This often includes bicycles but check as some policies make this an add-on with an extra charge.
Home Emergency Cover
Home boiler and plumbing emergency cover is often an extra offered. On many policies this can provide a valuable 24 hour emergency call out service. However make sure that your boiler meets the eligibility criteria for the policy eg it is not too old. Also note that boiler cover provided by some Home Insurance policies does not cover parts and, unlike specialist policies, generally will not provide an annual service.
Accidental Damage Cover
Accidental damage is for loss or damage of an accidental nature. This might be spilling wine, knocking a tin of varnish over a wool carpet or smashing a valuable statue etc. Is it worth it? It is if you have particularly valuable possessions. But remember again that every claim you make will affect your no-claims bonus and the cost of next year’s premiums.
Most home insurance companies give you a lower quote if you have a history of no claims. Many accept no claims discounts accumulated with other home insurance providers.
Would you like help in working out the best type of contents insurance for your needs? Our specialist advisors will talk through your circumstances and give you impartial home insurance advice here.