Home contents insurance: get it covered

Getting the right insurance to protect your possessions against the likes of theft, fire and accidental damage is a must.

Contents insurance is one of the two main types of home insurance, and it is designed to cover the items in your home that are not part of the fabric of the building – everything from rugs and televisions to furniture and jewellery.

The other type of cover – buildings insurance – protects against structural problems such as storm damage to a roof or subsidence. For property owners, buildings policies are vital and having one in place is typically a condition of taking out a mortgage. If your property is a leasehold, check with your solicitor whether it’s your responsibility to arrange buildings insurance.

What protection does contents insurance offer?

As a rule of thumb, contents cover applies to possessions and items in your home that are moveable – for example, those that you would take with you if you moved home. So windows and doors are not covered by contents – they would be insured under a buildings policy – but a laptop or a bike would be. Most claims under contents policies are for theft, or damage caused by fire or flooding.

Although this type of insurance appears straightforward at first glance, there is a number of factors that you should be aware of when choosing a policy, according to Chris O’Brien, the bank’s product development manager.

“As a customer you need to check things like whether there are any exclusions on the policy, as well as what sort of excess you would have to pay if you were to make a claim,” he explains.

The following are the main issues you need to consider when looking for a contents insurance policy.

The insurer’s approach to replacing items

In some cases, when you make a claim for an item that was bought several years ago, the insurer may only pay out what it thinks the item would be worth today, for example to reflect wear and tear.

Some insurers, however, offer new-for-old replacements – which means they will pay you the full cost of replacing a stolen or damaged item with a brand-new version.

The excess you’ll have to pay

Whenever you make a claim, your insurer will not pay out the whole amount – it will usually deduct a sum known as the excess. When you set up a policy, you can often choose what level of excess you would pay if you need to make a claim, typically from around £50 per claim up to several hundred pounds.

You should consider what level to set your excess, as it can sometimes be worthwhile to pay a bit more in monthly premiums to lower it. But, as O’Brien points out, there is no point setting your excess so high as to make claiming for minor losses pointless. “In many cases, increasing your excess will only save you a few pounds in monthly premiums.”

Protection for valuable items

Most policies have an upper value limit for individual items, for example £2,000 or £5,000. If you have anything you would like to insure that is worth more than this limit – such as jewellery or a racing bike – you should inform your insurer. Make sure you keep receipts for high-value goods. For jewellery or family heirlooms, you may need to have them valued independently to confirm they are adequately insured.

Overall cover levels

Different insurers have different approaches when it comes to the total amount of cover they offer. In some cases, customers are asked questions about the size of their homes, with cover offered on that basis. Other insurers will not put an upper limit on cover, while some will ask customers to work out the total value of their possessions. In the latter case, it is essential that you work this value out accurately so you are not underinsured.

Optional extras

Two options that are typically not included as standard with contents policies are cover for accidental damage and for items away from the home.

“Accidental damage cover can be especially useful for families with young children,” O’Brien explains. “So it could be worth paying a little extra for this protection.” If you are concerned about the likes of your smartphone or laptop when you are commuting or travelling, away-from-home cover may also be worth considering.

Check your security

Finally, O’Brien adds, any security measures you have in place at your home can help reduce the cost of cover. “Insurers will be looking to see that you have high-quality locks on doors and windows,” he says. “If you have an alarm system – especially one which is serviced by an external company – this can also bring down your premiums.”

The independent research company Defaqto assesses insurance policies according to a range of features, such as exclusions, excess levels and scope of cover, in order to provide a star rating out of five. To find out which contents insurance policies qualify for the full five-star rating, visit Defaqto.