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What is home contents insurance?
If an Englishman’s/woman’s home is purportedly their castle, then the contents found within its moat-surrounded walls (and beneath its battlements) must surely be akin to the crown jewels.
All of us have personal possessions and belongings that we would class as irreplaceable. While our TVs, laptops and tablets being damaged or pilfered is a massive inconvenience and potentially costly affair, they are ultimately replaceable, yet the same cannot be said about a priceless family heirloom handed down through the generations, or a signed photo of your favourite footballer/pop/film star/reality TV star. These items are often of immeasurable worth and simply incalculable when it comes to trying to compensate for their unpredicted loss.
That is unless the cherished contents of your home are insured and therefore can be replaced, in a fashion.
Perhaps not like-for-like when it comes to that aforementioned family heirloom, however equal to in terms of monetary worth. OK, sentimental value can never be re-accounted for alas, but it IS possible to recoup a large percentage of your in-house furnishings kit and gadget caboodle if you plan ahead to cover certain eventualities.
Admittedly, not one of us envisages having our homes flooded, burnt or ransacked by burglars, however all these heart-breaking incidents can play out at any given time, so if we can prepare for the worst in one way or another it will help reduce some of the emotional and financial burden should this befall any one of us.
Contents insurance is an insurance policy designed to safeguard the policyholder’s belongings should their existence be compromised by the sudden advent of fire, flood or criminal intent which effectively damages them beyond repair. Or with regards to criminal intent, results in said possessions going AWOL.
In terms of summing up just what ‘contents’ are in insurance lingo, and they are best described as ‘the things that could be taken with you when you move house’ generally-speaking. So think along the lines of your furniture (everything which is welded down to the floor such as sofas, sideboards, display cabinets, armchairs, bookshelves, beds, coffee tables, wardrobes, chest of drawers, TV stands etc…), kitchenware (for example pots, pans, crockery, cutlery, toaster, microwave etc… – but NOT the fitted units/built-in cookers and fridges), clothing, jewellery, ornaments, antiques, toys, books, CDs, DVDs, console games and of course, assorted gadgetry and electrical paraphernalia. This normally encompasses TVs, laptops, tablets, smart phones and all other digital media hardware. So pretty much everything discovered within really.
And then imagine just how much this little lot would cost you to replace in the event of a fire, flood or instance of theft, bearing in mind most of it has been accumulated over a period of time rather than being accumulated from a recent supermarket sweep.
We reckon that this ball-park figure would quickly run into the tens of thousands of pounds. i.e. a heck of a lot of money and a shortfall you couldn’t rectify in the following days or weeks out of your own pocket. Which is precisely why it makes absolute sense to arrange a contents insurance policy to pre-empt this.
But please note, age and condition of the irrepairably damaged/stolen goods at the point of them experiencing their unforeseen fate is key to how much the policyholder can expect to see in the guise of monetary compensation. For instance, if your 4 year old rug was ruined by an unavoidable water leak, any consequent pay-out the policyholder might receive as the result of a claim could be reduced due to its age (and therein considered wear and tear, pre-disaster).
This is referred to as an indemnity policy, or classed as ‘old for old’. Essentially a like-for-like agreement whereby you receive a value similar to the sum of what the item would have been worth on the open market in its pre-ruination state.
Alternatively contents insurance policyholders can opt for a ‘new for old’ cover, which pays the full amount for the equivalent brand-spanking new replacement of whatever it is, item-wise, that’s suffered irretrievable damage. Yet be aware that due to potential pay-outs by your insurer being higher in this case, your contents insurance premiums will also reflect this and subsequently cost more than an indemnity policy would.
Do I need contents insurance?
No, not in the eyes of the law, but having said that it NEVER pays to be wise AFTER the event. So if you plan ahead – and invest in a contents insurance policy – we believe it will end up being worth it for peace of mind alone; even if you never have to claim on it. You see, while buildings insurance is a must/stipulation imposed by your mortgage lender prior to signing up for most home-buying agreement these days, orchestrating contents insurance plans are completely up to the individual. But our advice to anyone with a home – or a tenancy agreement in place if you’re renting property that you’re living in – is to sort out some contents insurance at your first convenience.
Put it this way, you really have to ask yourself whether or not you’d be a position to buy everything that you stand to lose in the event of a fire or flood destroying your home and possessions within all over again, from scratch? The same question applies to finding the necessary funds to replenish your belongings should you fall victim to a burglar. Of course you couldn’t. Especially not when it’s taken you the best part of your life (in many cases) to piece together the items you do have and hold dear.
Also worth remembering that if you have personal possessions cover the policyholder will be protected should they misplace items outside the home, such as laptops, cameras and jewellery too.
Now you’re au fait with what a contents insurance policy does cover, it might be prudent to beware of what a typical one DOESN’T cover as well, just for the record.
Naturally this depends largely on individual policies yet acknowledging that this habitually includes; the structure of your home (walls and roof – which usually fall into buildings insurance categories anyway), perceived wear and tear to items and damage to a computer caused by a virus, amongst other things.
While different policies will offer a range of different cover, nine times out of ten the policyholder will be safeguarded against theft, fire and flood. But always read the small print and know exactly what your contents insurance plan does encapsulate, as ‘accidental damage cover’ and ‘personal possessions cover’ are both cited as optional extras in many cases; the latter being crucial to triggering the recompense for items lost away from the home mentioned above.
Again, some contents insurance cover will protect the policyholder against loss and/or damage while abroad too; but this is another opt-in clause.
How much does contents insurance cost?
It’s pretty much based on what you believe your contents are financially worth. Sentimental value means nothing to your contents insurer, unfortunately, however actual current market value of possessions and goods is key to your policy premiums. In as much as your overall cover will extend to include ALL the items in your home that you can’t live without and would immediately miss if they were damaged beyond repair or stolen.
As daunting a task as it might sound, the best advice we can afford you is to work out approximately how much everything is worth on face value here and now. We say approximately but the more accurate these figures are the better in terms of potential replacements. The easiest method of completing this important exercise is to work your way around your home room by room totting up the value of items which comprise each as you go.
Always keep an additional record of all items which alone amount to more than £1,000, as these are identified as high risk items in the eyes of your contents insurer and need to be itemised separately on account of them being prime motivators for more targeted burglaries.
Adding in any extra cover – as outlined earlier and also including the extra-protective likes of legal expenses and home emergency – will ramp up annual/monthly premiums a notch or two as expected, yet will ensure greater peace of mind in the long run.
What can I do to reduce the cost of contents insurance?
Thankfully you’ll be pleased to learn that there are a number of precautions the homeowner/tenant/policyholder can make to help reduce the cost of annual/monthly premiums on their contents insurance policy. For example ensure that you have a good house/burglar alarm fitted and working (can decrease your premium by as much as 7%), and fit approved locks on all windows and doors (a further 5% savings can be realistically be made) as well as consider joining your local Neighbourhood Watch scheme.
Elsewhere and purchasing a home safe, increasing your excess and owning a guard dog are all moves you can make which will be looked on positively by your contents insurance provider in relation to making your premiums more competitively priced.