Home insurance: Contents insurance guide
Contents Insurance
There are two types of home insurance – buildings insurance and contents insurance.
Buildings insures against damage or destruction of the bricks and mortar and fixtures and fittings of a home. Contents insurance, as the name suggests, insures against loss or damage to other, re-moveable, items inside a home.
They both cover you against theft, fires, subsidence and other threats and they can be bought separately or together.
Contents Insurance
Home contents insurance covers loss or damage to your personal belongings and includes a huge range of possessions. Like buildings insurance, you pay a premium covering the cost of your effects and, if they are destroyed in a fire or stolen during a theft, you can claim money back to cover the loss.
What does it cover?
There are a wide variety of possessions which can be covered by a contents insurance policy and they are almost impossible to list here. The Association of British Insurers describes it as anything you would take with you if you moved home.
Electrical equipment such as televisions, radios and computers, clothing, furniture, kitchen utensils and contraptions, sports equipment, jewellery, CDs, musical instruments and ornaments are just a few.
Different policies provide different levels of cover. A 'replacement as new'/'new for old' policy means you will be paid the full cost repairing an item or the full cost of replacing it with something of equal value. An indemnity policy, however, will deduct money from the claim to account for wear and tear and depreciation of an item.
Most policies will cover loss or damage to items in your home in the case certain events occurring. The list of these "perils" is similar to those covered in the buildings insurance guide: fires, explosions, lightening, an earthquake, storms, floods or falling trees or branches.
Subsidence, theft or attempted theft, as well as water leakage from tanks or pipes, breakage of television or satellite aerials or escaped oil from heating systems are covered.
Contents insurance can be taken out by anyone who owns a home, or who is a tenant in a home. Tenants are advised strongly to take out a policy as contents are not usually covered by their landlord.
Calculating how much is needed
As with buildings insurance, it is essential you insure the contents of your home for their full value as claim payments could be reduced if you are under insured.
Guidelines suggest you walk around your home, to each room, calculating how much it would cost to replace each item at today's prices. It is important to take into account wear and tear.
You can take out extra cover for accidental loss to possessions you take out of your home regularly, such as jewellery and also for food in your freezer, credit cards or personal money. This comes at an additional premium.
How to get lower costs
Prevention is the key to ensuring your risk of loss is lower. Robust security is always an added bonus. But a bit of common sense, such as not putting expensive televisions or sound systems on display in windows, can help prevent theft.
Insulating pipes and tanks and securing them against bursts could prevent any accidents. Once again, a smoke detector in good working order helps guard against fire and people in flood-risk areas should always be vigilant and pack valuables away when the weather looks threatening or flood warnings are issued.
You might also be able to get a no-claims discount from some insurers if you renew a policy. This means you will receive a reduction in premium if you have not made a claim over a certain time period. If certain security is installed, insurers might consider a discount on a premium, and the costs are often age-related or can go down if you are a member of a neighbourhood watch scheme.
Pitfalls
Many home contents insurance policies are complex. With different types of insurance such as replacement as new/new for old, there can be much confusion over what you can insure as new. Age limits also apply. It is important to read your policy careful to avoid under or over insuring your possessions. Giving inaccurate information to your insurer can lead to rejected or reduced claims.
With so many new state-of-the-art products coming on to the market, it is often surprising just how quickly you can acquire new possessions. For this reason it's worth keeping track of new items and keeping your insurer informed. Again, if you don't let them know about a swanky new gadget, you won't be able to claim for it if it's stolen or destroyed.