About Contents Insurance
Contents insurance is a type of home insurance that doesn’t pertain to the building, but rather any possessions within the house. In most cases, these policies will 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, particularly those that are expensive or necessary. 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. Damage or loss are the meaning reasons people take out a plan like this.
So, what exactly does this kind of policy cover? Well, it generally includes:
- Items such as clothing, furniture or jewellery. Usually these are items considered to either be worth a lot of money, or useful/necessary.
- Electrical goods: in particular, laptops and cameras but usually all electrical goods are covered.
You can also get different types of contents cover. The specific details will depend on the kind of policy you take out. Some will have optional extras such as “accidental damage cover” – so you should review your policy and never assume that it is included. Another extra includes “personal possessions cover”. This will affect items you take out of the house in cases of fire, flood or theft such as:
- Mobile phones
Depending on the contents insurance policy, your possessions will also be covered when you go 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 to be as necessary or vital as health or car insurance. People who want to get cover for their possessions need to take the pros and cons into account before signing a policy.
- Pro: Customers can pick a “new for old” policy which will replace damaged or lost items.
- Pro: Personal possessions cover will allow 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 what is known as 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 need to be fully understood. You should also be aware of any exclusions (possessions that won’t be covered) 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 are 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 will usually encounter three types:
- “Bedroom rated” – The “sum insured” (amount of contents cover) is worked out by the insurer. 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 will 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. This can be done by using one of the many online calculators out there. You must simply list your possessions, add up what their replacement cost would be 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.