Household Insurance » Contents
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. In the event of a major disaster, such as your home being flooded, would you be able to pay to replace your contents?
In reality, unless you have substantial savings, the only way that you can replace your personal contents is to ensure that you have contents insurance.
A general rule of thumb is that contents are any items that you would take with you if you moved home. One exception to this rule is 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. Some policies also include cover for plants in the garden.
What contents insurance covers
Contents are typically insured against a number of ‘specified perils’, and are normally covered against the loss of, or damage caused, as a result of:
- Fire, explosion, lightning or earthquake
- Storm or flood
- Riot, civil unrest, strikes, and labour or political disturbances
- Malicious acts
- Impact from aircraft or other flying objects, or anything falling from them
- Water escaping from water tanks, pipes, equipment or fixed heating systems
- Oil leaking from a fixed heating system
- Theft or attempted theft
- Falling radio or television aerials and dishes, and their fittings and masts
- Subsidence or heave of the land that the buildings stand on, or landslip.
- Falling trees or branches.
- 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.
Accidental damage cover
Most contents insurance policies will offer the option to extend the cover to include accidental damage. For example, if you spilt paint on your carpet, the costs involved to clean and remove the paint are covered.
Personal possessions cover
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. You will 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.
Excesses and exclusions
An excess is the first part of a claim that is not covered by your insurance policy. Excesses are either applied on a compulsory or voluntary basis in return for a reduction in premium. Compulsory excesses that are applicable can vary and are also dependent on the type and/or amount of contents that is insured.
Most insurance providers apply an excess to deter trivial claims, and these excesses generally range from £50 to £100. In addition, many insurance providers will allow you to take an increased ‘voluntary’ excess in exchange for a reduction in the premium.
There are a number of common exclusions, which are usually referred to as ‘general exclusions’ that are applicable within an insurance policy. These exclusions can include losses arising out of:
- Sonic bangs
- Radioactive contamination from nuclear fuel or waste
- Wear and tear.
Contents Sum insured
The sum insured you declare to your insurer should represent the full replacement costs of your contents with brand new items.
One of the most important things to remember when you are calculating your contents sum insured, is the amount of cover needed for your valuables. These are usually defined as jewellery, gold and silver articles, watches, gemstones, clocks, furs, pictures, sculptures and other works of art and collections of stamps, medals and coins. Be aware that most policies apply maximum limits.
To calculate the appropriate level of cover for your contents involves nothing more than going from room to room, itemising everything and assigning a replacement value to each item. In any event, it is usually advisable to compile a proper inventory. Once you have recorded the value of your worldly goods on a spreadsheet, it should not be too difficult to keep it updated. It is also advisable to keep receipts, valuations and photographs of valuable items.
Failing to insure the correct amount will mean that when a claim is made, the insurer could apply an insurance term known as ‘average’ or ‘underinsurance’. This means that any claims payment will be reduced by the percentage that your contents are underinsured. It is therefore essential that your sum insured are based on the full replacement costs of your contents on a ‘new for old’ basis.
Once you have taken out a contents insurance policy, most insurers 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.
If you buy any major new items, you should contact us so that we can amend your policy accordingly.