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The YourMoney.com guide to contents insurance

Kit Klarenberg
Written By:
Kit Klarenberg
Posted:
Updated:
29/07/2015

What is contents insurance, and what does it cover?

Contents insurance offers protection to anything in your home that isn’t attached to the building – this includes personal effects, accessories (e.g. white goods) and ornaments (e.g. furniture).

Contents insurance differs from building insurance, in that the latter applies to permanent fixtures (e.g. the kitchen sink).

Building insurance is a mandatory prerequisite of securing a mortgage in most cases, but contents insurance is entirely discretionary. It is possible to buy separate contents and building policies, or a combined policy, depending on your preferences. Equally, you may choose not to buy contents cover at all, but it is worth setting aside some money every month to cover the risk of loss.

Of course, different contents insurance policies offer the holder different degrees of cover – but generally, a holder’s possessions are covered against theft, fire and flooding.

There are many optional extras that supplement basic coverage, too. These are almost always discretionary, so don’t assume they’re included;

  • Accidental damage
  • Personal possession coverage, which insures items that you frequently use outside your home (e.g. laptops, cameras, MP3 players)
  • Holiday coverage, which protects your possessions against loss and damage abroad

What isn’t?

Contents insurance policies offer fairly comprehensive cover – but, as with any insurance policy, certain expensive items won’t be included. Aside from the elements of your home that are covered by building insurance, contents insurance almost never offers cover against general wear and tear, or things like computer viruses.

Do I need contents insurance?

It is difficult to secure a mortgage without building insurance, but contents insurance is usually optional.

However, contents coverage is one of the most cost-effective forms of insurance – according to the AA, the contents of the average home are worth around £45,000, and a contents insurance policy costs an average of £109 annually.

You need to weigh the cost of insurance against the cost of replacing your most valued possessions in the event of a fire or burglary.

Are there any drawbacks?

One potential drawback is that most contents policies have single item limits (generally, this figure ranges between £1,000 and £2,000). If an item you own has a value that exceeds this limit, you will need to secure additional coverage on top of your basic policy. Your policy may even set a total item limit, meaning you are only covered up to a set amount – and this figure might not reflect the true value of the contents of your home.

Furthermore, as with most other forms of insurance, you are required to pay an excess on every contents insurance claim you make – and making a claim will bump up your premiums. If your excess is high, it could mean that claims for small losses (whether through damage or theft) don’t offer value for money.