Contents insurance explained

Contents insurance

Contents insurance refers to the non-fixed valuables contained within your home. A useful guide to what constitutes your ‘contents’ are the belongings you would take with you if you moved home.

This type of insurance is entirely optional but now heavily advisable for homeowners and tenants. With most homes containing items of great financial and sentimental value that we wouldn’t want to part with, combined with the continued rise of criminal threats and the risk of damage from the elements such as fire or water; some would say it has become an essential part of our household costs.

Policies vary but standard contents insurance covers anything that is not fixed to your house, such as furniture, clothing, appliances, the contents of your fridge/freezer and electrical goods. Much the same as building insurance, contents insurance can offer protection against diverse external hazards including:

• Fire/explosions
• Storms/flooding
• Theft and vandalism

Contents insurance cover might also include mobile items that leave the home, such as bicycles, sports equipment or prams. Expensive items of clothing could also be listed, along with accessories such as watches and mobile electronic equipment like phones, MP3 players and laptops. Each policy is different and you will need to continually check and revise your policy when new items are introduced. If your policy doesn’t cover these items, see ‘gadget insurance’.

Indemnity insurance

The cheapest policy for your contents insurance, this will cover your possessions for their current market value and will compensate on a like for like basis. For example, if your TV is 2 years old when it is stolen or damaged, through this type of indemnity insurance, your replacement will be of the same ilk and quality.

A standard indemnity policy may typically include:

• The cost of replacing mirrors or glass broken by accident or vandalism
• Theft or damage of satellite equipment, up to the value of £500
• Money kept within the house, up to the value of £500
• Stolen or lost credit cards, up to the value of £500
• Office equipment kept in the house, up to the value of £5,000
• Damaged or broken locks replaced, or lost keys replaced
• Theft or damage of deeds & other contractual documents within the house, up to £250
• Loss of (metered) water, up to the value of £1,000
• Contents of your fridge/freezer, up to the value of £500

New for old insurance

This policy comes with a much higher premium than standard Indemnity insurance as you are requesting to replace older goods with a lower market value with brand new and more expensive items. For example, a 2 year old DVD player has probably had regular use and has inevitable wear and tear, so being replaced by a brand new player which is a newer model and probably has more features included as standard, would increase the value of the item.

Optional extras

Standard Indemnity insurance is the cheapest around but there are other policies and add-ons that can increase your contents protection:

Legal expenses cover – this add-on will provide access to legal advice, cover your lawyers’ fees and court costs in defense of a claim as well as any amount paid to a claimant from a legal dispute. Policies range from compensation for injuries sustained (including your own and if anyone were injured whilst in your home due to negligence of the property maintenance) and also consumer or neighbour disputes

Freezer contents cover

If not included as standard, you can add this cover and pay for a fixed cost in the event that the food in your fridge or freezer becomes uneatable

Sports equipment cover

If not included as standard, you can cover the cost of moving your sports equipment such as golf clubs, from place to place. However, they will usually only be covered for transport and not while in use

Garden cover

If not included as standard, you can protect against theft from your garden and equipment, bikes or tools from your garden shed. Outdoor plants are now commonly covered as standard, as your garden can be viewed as another room of your house but plants or garden items and furniture that exceed £1,000 in value, may have to be included in a separate specialist policy

Accidental damage cover (in home)

If not included as standard, it safeguards against the common mishaps from DIY accidents and paint spillages to dropping a laptop or television and is available in both building and contents insurance

All risks cover

Refers to accidental damage or loss outside of the home. Contents insurance can also be applied to possessions typically worn or taken outside of your proverbial four walls like clothing, cameras, jewellery and MP3’s, etc. There is usually a limit applied for any one item, with some deemed high risk from theft, which may increase your overall premium

Things to consider before choosing your contents insurance:

• Make sure the full value of your belongings is included, room by room.
• Break one item down into components of lower value where possible, for example: a video camera can have its tripod and peripheral equipment such as tapes insured separately
• Insure higher value items separately
• With limits on what insurers will pay out for some high value items like jewellery or paintings – look to specialist insurance cover. You may also have to provide valuations to your Insurer for proof of worth.