Are you wondering if you need contents insurance? Perhaps your policy is up for renewal, and the cost seems like an unnecessary expense.
Contents insurance offers you the peace of mind that you’ll be able to replace your belongings should the worst happen and you’re the victim of burglary, fire or flood.
This guide will help you understand how contents insurance works and what it covers and does not cover.
What is home insurance?
Home insurance is the umbrella term for buildings and contents insurance.
Contents insurance – covers your possessions, such as TVs, furniture and clothes, against loss or damage in the home.
Buildings insurance – covers the structure of your building and its permanent fixtures, such as kitchens and bathrooms.
You can buy buildings and contents insurance separately; however, most insurers will offer joint cover as standard. Many insurers will also give you a discount if you get your contents and buildings insurance from them – sometimes as much as 40%.
If you are renting, your landlord is responsible for insuring the building and any furniture and appliances, which they provide. You will need to take out a contents insurance policy of your own possessions that you bring to the rental home.
Is it compulsory to insure my contents?
If you’re buying with a mortgage, your lender will require you to take out buildings insurance. You’re under no similar obligation to have contents insurance. But if you’re thinking of doing without it, consider how easy it would be to replace, perhaps £50,000-worth of home items in one go!
What does contents insurance cover?
Home contents insurance covers you against loss, theft or damage of your personal and home possessions. This generally includes:
- Furniture – sofas, dining tables, beds and wardrobes
- Electrical goods – TV’s, computers, tablets and games consoles
- Soft furnishings – curtains and bedding
- Clothing and jewellery
- Toys, ornaments and antiques
Every policy is different, but you’ll usually be covered for theft, fire and flood.
Extra cover for your home contents
Some insurance providers will offer extra cover at a cost. The most common extras are:
Accidental damage cover
An accidental damage policy will cover damage that occurs as a result of a non-deliberate external action. For instance, if you spill red wine on your cream carpet, the policy would help you cover the cost of cleaning or a replacement.
Personal possessions cover
Personal possessions cover can be added to your home contents policy. This means that valuable items such as laptops, cameras, mobile phones and jewellery are covered when you take them out of the home. Some policies may even cover you when you take these items abroad. Your policy may cover your family bicycles too.
There will usually be a limit on the total amount you can claim for these items as well as a limit for each individual item – unless you pay a higher premium to increase your cover.
Legal expenses policies cover legal fees if you are involved in a dispute. For instance, if you take a tradesperson to court or if someone was injured in your home and subsequently sued.
Home emergency cover
Home emergency cover provides emergency assistance if the property’s plumbing, drainage, heating or power supply fails, or if damage to the doors or windows compromises the security of the property. The insurer will be available 24 hours a day and will arrange for a contractor to secure the property and prevent further damage. Policies sometimes include an allowance for temporary accommodation.
What contents insurance doesn’t cover
There are a number of things that aren’t covered by home contents insurance. Depending on your policy, things that may not be included are:
- Damage caused by normal wear and tear
- Damage caused to a computer by a virus
- Loss of digital information such as replacing paid-for downloaded films, books or music
- The structure of your home, including permeant fixtures and fittings such as kitchens and bathrooms. This would be covered by buildings insurance.
With most policies, cover on personal possessions is limited to £15,000 with a £1,500 cap on each individual item. If you have expensive possessions – an engagement ring, high-spec bike or inherited work of art, for example, you will need to buy additional cover.
Your standard cover might include the cost of replacing your mobile but some policies include a big excess for pricier phones – particularly iPhones.
Make sure you understand all the terms and exclusions of your policy before you buy. Read your documents carefully and query anything you aren’t sure about.
How much does contents insurance cost?
The cost of insurance policies varies widely depending on the amount of cover you require and your excess. However, home contents insurance could be cheaper than you think. According to the Association of British Insurers (ABI), the average cost of a contents only insurance policy is £59.22 per year and a combined home and contents policy is £161.75 per year.
As with car insurance, the longer you go without making a claim on your home insurance, the higher your no-claims discount will be, meaning your premiums will be lower.
Most policies come with an excess, meaning you will need to pay a proportion of any claim. Generally, cheaper policies have higher excesses but may allow you to vary the amounts for an additional charge.
What types of policies are there?
There are three main types of contents insurance policies.
- Sum insured
- Unlimited sum insured
The policy will specify whether the cover is for new-for-old or indemnity cover.
The insurer will usually calculate the amount of cover you need based on the number of bedrooms in your home. Most of these ‘bedroom-rated’ policies will provide you with between £40,000 and £50,000 of cover.
Think about how much it would cost to replace the items in your home, as well as the cost of your most expensive belongings, to see whether this level of cover is adequate. There are many online contents calculators you can use to help you, such as this one on the Which? website.
Less common are ‘sum insured’ policies, where you are responsible for calculating the total amount of cover you need.
Unlimited sum insured
An unlimited sum insured policy covers all your possessions with no limit.
New-for-old vs indemnity cover
Many policies will offer you ‘new for old’ cover – meaning you’ll receive enough money to replace your stolen or damaged items with new ones.
Some policies, however, will offer you ‘indemnity cover’– which means you’ll only receive the current value of the items. These policies may have cheaper premiums but could end up costing you more in the end.
Three things to do before you buy
1. Shop around – makes sure you get a few quotes. Using comparison sites might make this easier. Never renew an existing policy without checking, as many insurers offer big discounts for new customers. The insurer you choose should be authorised and regulated by the financial conduct authority.
2. Get the right level of cover – make a rough valuation of your belongings to be sure you have sufficient cover, but also that you aren’t paying for a level of cover you don’t need. Be especially careful to value precious and expensive items.
3. Read your policy carefully to ensure that all the information you’ve given is accurate and the policy is right for you. Otherwise, you may have a claim refused.
If you’re looking to buy or rent a property in Wimbledon Village, please get in touch. We can show you the properties we currently have available and talk you through any aspects of the moving process which you’re unsure about.