Contents insurance

Unlike buildings insurance contents insurance is optional as the property concerned is yours alone and not the concern of your bank or landlord. However, the cost of replacing all your worldly possessions in the event of a fire or flood, or your valuables or electrical items in the event of a burglary will almost certainly be higher than you think.

When we think of contents insurance we mostly think of the type of item that may be stolen from your home such as a TV or DVD player, expensive jewellery or your CD collection however if your home was to be destroyed you would not only have to replace these items but also your clothes, kitchenware, furniture, bedding, books even the food within your freezer. Because of this, contents insurance is vital and it is essential that you value the property within your house correctly.

If you own your own property then you will be required to have buildings insurance for your home. A lot of insurers offer discounts on contents insurance if you take it out from them at the same time as the buildings insurance. This may end up saving you money so be sure to check any deals on offer by your buildings insurance provider while you shop around.

What’s covered?

Contents insurance covers any item that is not a part of the fabric of your home, as well as furniture, clothing and valuables carpets and curtains may be covered and in some policies even the cost of replacing the food in your house can be covered.

Some policies may cover for items outside the home as an additional extra, such as replacing the contents of your handbag or wallet if it is stolen on a night out, however the terms of each policy will vary on this matter. Here are some of the items commonly used outside the home that you should check to see if your policy covers:

War A laptop if being used at work, school or college.
Terrorism A pedal cycle kept outside the home.
Radioactive contamination The contents of your handbag or wallet.
Radioactive contamination Items found in your garden shed, such as lawnmowers, hedge trimmers etc.
Radioactive contamination Credit cards and baggage if travelling abroad.

Although some policies may cover the basic items taken with you when travelling it is always advisable to consider a travel insurance policy, as not all your belongings will be covered by your contents insurance.

Some insurers have an automatic increase in the sum covered for the weeks either side of family weddings and Christmas. Be sure to check with your insurer if this is available and to notify them if a member of your immediate family is getting married.

A large number of eventualities will be covered by your insurance policy, some may be more important than others. For example if the only pet you own is a goldfish it may not be worthwhile paying for a policy that extensively covers damage done to your property by a household pet. Some typical situations that will be covered by contents insurance include:

War Theft
Terrorism Damage by fire
Radioactive contamination Damage caused by flooding
Radioactive contamination Earthquake damage
Radioactive contamination Vandalism against your home

Some policies may pay for the replacement of locks in your house if your house keys are lost or stolen, but this differs between providers so be sure to check the small print on each one.

What’s not covered?

As always contents insurance policies will have some exceptional circumstances under which you will not be covered. These may include:

War

Loss of an item outside a certain distance from your property

Terrorism

Wilful damage of property

Radioactive contamination

Damage caused by DIY or damage to glass within your property

Remember to check through your policy carefully to see which exceptions apply to you.

Items such as works of art or antiques may not be covered as standard by your provider so be sure to take out adequate extra cover for these items.

Excess

The excess value for a policy is the value you will have to contribute to the cost of each claim before the insurer pays out. Because of the relatively low cost of some household items it may prove cheaper to replace them yourself without claiming on your policy, remember claiming on your policy also affects your "no claims bonus" as it would on a car insurance policy so only try to claim when absolutely necessary.

Additional Options

Contents insurance policies will often offer extensions of cover to insure items that would not usually be covered by the policy. These often come at an additional cost and may even be offered as standard by another provider. Be sure to shop around to avoid paying extra. That said, it is vital that you are correctly insured, if you have large pets or young children in the house it is vital that you take out accidental damage cover to protect your possessions.

Extensions of cover for valuable items may also be offered; this is worthwhile if you own antique jewellery, a large DVD collection or any expensive electronics equipment. Items such as these will be covered up to a certain amount as standard, but if your possessions are worth more than the standard amount it is vital that you insure them for their full worth.

Items such as pedal cycles may only be covered on your contents insurance policy up to a certain value. If you cycle on a regular basis it is recommended that you either extend your cover or take out a separate insurance policy, especially if it is your primary means of transportation.

Household Emergencies and Boiler Cover

You can also buy policies to cover emergency repairs or replacements of specific items in your house such as the boiler or central heating in your house. The AA offer a service called Home Emergency Response. By purchasing this cover the AA guarantee to provide you with approved tradesmen who are available 24/7. There are no call out fees with the AA Home Emergency Response and all repair work is guaranteed.

Home Emergency Response has 3 options for cover:

Home Emergency Response
Price: £6.99 per month
What the policy covers:

  • Emergency plumbing,
  • Water supply pipe,
  • Roof damage,
  • Broken windows,
  • Lost keys and lock damage,
  • Removal of wasp and hornet nests,
  • And internal gas and electrical failure.

Boiler Cover
Price: £16.49 per month
What the policy covers:

  • Gas boiler and heating controls,
  • Annual boiler service,
  • Up to 4 boiler breakdown claims a year,
  • £250 towards a new gas boiler if yours can’t be repaired.

Central Heating Cover
Price: £19.49 per month
What the policy covers:

  • Gas boiler and central heating,
  • Radiators,
  • Annual boiler service,
  • Unlimited heating breakdown claims,
  • £500 towards a new boiler if yours is less than 7 years old and is irreparable.

Discounts for all levels of cover are available for AA members, just visit www.theaa.com.

New for Old Cover vs. Indemnity Policies

Although your possessions may not be worth very much in their particular age and condition, replacing them with a new item could cost a lot more. Most insurers offer “new-for-old” cover; this covers the cost of replacing the item that is lost or damaged with a new version. New for old cover may cost a little more than other options but it is definitely worth the extra cost when insuring items such as furniture and electrical equipment. Some items may not be covered under new-for-old policies so be sure to check carefully for exceptions, these usually include items of clothing, which are viewed as having a “life span” so they only last for a few years before becoming unusable, as opposed to items like sofas or televisions.

The alternative to new-for-old cover is an indemnity policy. This takes into account the wear-and –tear to the item, the cost of replacing the item is paid out but with a deduction for any everyday wear and tear on the item and also for any depreciation of value of the item. These policies do have lower premiums than new-for-old policies, however they may be less practical when it comes to replacing the contents of your house.

Valuing your property

Like buildings insurance contents insurance can either be on a bedroom-rated basis or a sum-insured basis. It is vital that you calculate the value of your property before taking out either type of policy to make sure that you are adequately insured. Some categories of item (for example computing equipment or clothing) may add up to more than the standard sum for that type of item and so will require extra cover.

The value of the possessions you own will almost definitely add up to more than you think it will so start by making a checklist and going through each room one by one adding up how much each item would cost to replace as new. Check your policy to see which items are grouped together, for example TVs and DVD players may come under the heading of “electrical equipment” but your computer may fall under a different category entirely. Note the maximum value that each category is ensured up to and see how this compares to the value of the items you have in your home. If your possessions add up to more than the standard claim it may be wise to consider taking out extra cover for these items. Don’t forget to check if outbuildings are covered by your policy and make a note of the items within them too.

Make a list of all the valuable items in your home, in the event of a burglary it is likely that only some of these would be taken so it is vital to recognise the cost of the items that have been taken, remembering every item in your jewellery box may be harder than it first appears!

Make a note of any items excluded from your policy, such as ornaments, artwork or antique jewellery and check to see if your policy provider offers extra cover for these items. It may work out cheaper to get these items separately insured with a specialist so be sure to shop around for the best deal before you buy your policy.

Most policies will link the sum insured to the rate of inflation to account for the rising cost of the items you own, despite this you may wish to keep an eye on the changing value of the more expensive items within your home to ensure that you always have enough cover.