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Home contents insurance guide

If you have a mortgage on your property you are required by your mortgage provider to have buildings insurance, but cover for your contents insurance is an entirely personal choice. If disaster strikes, the cost of replacing the contents of your home could be more than you can afford, so not insuring your personal contents could well be a false economy. In the event of a major disaster, such as your home being flooded, would you be able to pay to replace your contents?

For more information on buildings insurance, see our home buildings insurance guide.

What is contents insurance?

In order to appreciate what is covered by contents insurance, you must understand what is meant by the contents of your home. It is probably best to think of contents as being the items you would take with you if you moved home. There are however, exceptions to this rule, such as fitted carpets.

Items such as your living room or bedroom furniture, TVs, kitchen equipment and clothing are all classed as home contents, but there are other items to consider as well, which are not usually kept in the home. Garden furniture, barbeques, lawnmowers and bicycles – kept in the garden, garage or shed – are also classed as contents and need to be insured. Another area where cover is included (by some policies) is for plants in the garden.

The cover needed for your contents insurance should always be based on the 'replacement cost'. Many insurance providers replace your old contents with brand new items and, therefore, you should ensure that you insure your contents for their full replacement cost.

What does contents insurance cover?

Contents are typically insured against a number of 'specified perils'. This means that your contents are covered against the loss of, or damage caused as a result of:

  • fire, smoke or explosion
  • storm, flood, lightning or earthquake
  • riot, civil unrest, malicious acts and labour or political disturbances
  • impact from aircraft or other flying objects, or anything falling off them
  • water escaping or freezing from water tanks, pipes, equipment or fixed heating systems
  • oil leaking from a fixed heating system
  • theft or attempted theft
  • falling radio and television aerials and dishes, and their fittings and masts
  • subsidence or landslips.

Some home contents policies may also include cover for the following:

  • the cost of alternative accommodation in the event that your home becomes uninhabitable
  • following loss or damage to your contents
  • accidental damage to television, video and audio equipment
  • cover against the costs of replacing the contents of your freezer
  • loss of oil or metered water and the costs involved
  • the outlay involved in replacing the locks of you home if your keys are lost or stolen.

Additional cover options

Most contents policies will allow you to extend your contents insurance to include cover for accidental damage. For example, if you spill paint on your carpet, the costs involved to clean and remove the paint will be covered. Accidental damage cover is usually provided as an optional extension to home contents insurance, meaning it incurs an extra cost.

You can also extend your cover to include items that you take out of your home, such as sports equipment, clothing, laptop computers, cameras and jewellery. This is called 'personal possessions cover'. You may have to pay an additional premium, and there is likely to be a cover limit for items that are not specifically mentioned in the policy.

Home contents insurance exclusions

Exclusions outline what is not included in your policy. There are a number of common exclusions which can include losses arising out of:

  • war
  • terrorism
  • sonic bangs
  • radioactive contamination from nuclear fuel or waste
  • wear and tear.

Exclusions can apply to the whole policy or to specific sections of cover. It is important that you read through your policy details carefully to ensure you have the cover you need.

Contents insurance excesses

The excess is the amount of money you'll pay towards the cost of your claim. For instance, if you have a £500 excess then you will have to pay £500 towards the cost of any replacements in your home. Excess amounts vary between policies and can be compulsory or voluntary. Sometimes having an excess amount can reduce the amount you pay for your policy.

There are, however, a number of insurance providers who will allow you to 'buy back' the excess. This means that if you do not require an excess to be applied the excess can be reduced to zero (subject to paying a higher premium).

Sum insured

The sum insured is the amount that you declare to your insurance provider. It should represent the full of cost of replacing all of your household contents with brand new items.

One of the most important things to remember when you are calculating the sum of your content insurance is the amount of cover needed for your valuables. These are usually defined as:

  • jewellery and gemstones
  • gold and silver articles
  • watches
  • clocks
  • furs
  • pictures, sculptures and works of art
  • collections of stamps, medals and coins

Be aware that most policies apply maximum limits.

Some insurance providers make the process of calculating the sum insured required easier for you, by basing the level of cover on the number of bedrooms in your home. They will provide a fixed amount of cover, typically £30,000-£50,000, for all your belongings. For many people, bedroom-based policies provide adequate cover. However, for those whose sum insured levels are higher, a 'sum insured' based policy would be more suitable.

Failing to insure your contents for the correct amount will mean that when a claim is made, your provider may apply an insurance term known as 'average' or 'underinsurance'. This means they will reduce your claims payment by the percentage that your contents are underinsured. It is therefore essential that your total sum insured is based on the full replacement costs of your contents on a 'new for old' basis.

Once you have taken out an insurance policy for your contents, most insurance providers will apply a term known as 'index linking'. This ensures that your sum insured is increased in line with any changes in the level of the Retail Prices Index.

Remember, if you buy any major new items, you should contact your insurance provider so they can update your policy.

Tips when purchasing home contents insurance

  • Insurance providers generally provide an extra discount if buildings and contents insurance are purchased together.
  • Purchasing your policy direct usually works out cheaper.
  • If you have another insurance policy with the same insurance provider, mention this as you could get a discount.
  • Fitting approved window and door locks also generates discounts with most providers.
  • If you are a member of a neighbourhood watch scheme, inform your insurance provider.
  • Insurance providers will allow a discount for a higher voluntary excess
  • Check the direct debit fee charge as many insurance providers now offer 0% fees.
  • Always check the policy excesses to be certain that you are aware of the amounts you are required to pay if you make a claim.
  • Check the cover limits provided for benefits such as alternative accommodation.
  • Check whether the insurer makes charges for policy amendments.
  • Be aware of any policy endorsements the insurer applies.

This home insurance guide outlines some of the features of home contents insurance. You can assess the comprehensiveness of different policies by looking at the Star Rating of a contents insurance policy and comparing it to others.