What is Contents Insurance?
The basic principle behind contents insurance is to cover a person with regards to having to pay the full cost of replacement if their possessions are stolen or damaged while living within a home. Possessions can be defined as anything that is not part of the structure of the home. Contents insurance is often combined with home insurance or buildings insurance but can be bought as a stand alone policy e.g. contents insurance for people renting, as the bulding insurance will be the responsibility of the landlord.
Different contents insurance policies will have different terms on what is covered and what is not so the price of cover while important should not be the main consideration.
How do you buy Contents Insurance?
Before you commit to any contents insurance policy, there are a few steps to take:
1. Decide what type of contents insurance policy you will need. ‘New for old’ will mean that any insured items that are stolen or damaged will be replaced by brand new versions. Indemnity policies will take into account both the age of the item and how much it had been used when formulating an insurance payment.
2. You will need to complete a careful and thorough valuation of your possessions so that you do not stop yourself getting the best deals on contents insurance by over-valuing or under – valuing how much you own.
3. You will need to check what is included as standard on most contents insurance polices. Most standard policies will cover a person from loss or damage resulting from:
Theft or vandalism
4. The last step in preparing for purchasing contents insurance is to specify if you have any special requirements from your policy, such as extending the cover to things in the garden or certain items that have a lot of value or are irreplacable etc. Many providers will have contents insurance exclusions such as items that regularly leave the home e.g. laptops and mobile phones. Contents insurance cover for these items may incur an additional premium.
5. Consider including emergency contents insurance cover in your policy. Examples of the kinds of events covered by contents insurance with emergency cover include:
- Burst pipes due to cold weather
- Blocked drains
- Boiler malfunction and leaking water pipes
- Problems with the power supply of the house
- Animal infestation
- Breakdowns of home security systems
Any of these events do not tend to be covered by standard contents insurance, so emergency cover provides valuable peace of mind.
Another important aspect of emergency cover is that some policies will insure a person and their family from the cost of alternative accommodation if the emergency is so severe that it means your home is temporarily uninhabitable.
The main problem that experts highlight with regards to contents insurance emergency cover is that the definition of what constitutes an emergency will tend to differ between companies. This can leave people unsure of when they are able to make a claim and means they are either paying for a policy they don’t use, or paying the cost of repair despite the fact they have a policy that would cover it.
It is important to make sure you are certain of what different policies allow when looking at contents insurance quotes with emergency cover.
6. Contents insurance excess is one of the least understood parts of home insurance in general. You would be forgiven for thinking that taking out a home insurance policy will mean that you only have to pay the premiums.
An excess on your contents insurance is the amount of money the policyholder (you) will pay towards the cost of making a claim on their insurance policy. All of the contents insurance providers listed below will have slightly different policies regarding excess. You can agree to pay a high level of excess in order to reduce your premiums:
There are two main types of contents insurance excess:
Compulsory contents insurance excess - is the amount that is set out in your policy and your insurer will ask you to pay if you decide to make a claim. This amount should always be considered when looking at contents insurance quotes.
Voluntary contents insurance excess
- is anything you add to the compulsory amount. The more you pay when and if you make a claim, the less you will pay in premiums.
The majority of insurers will offer consumers the chance to raise their voluntary excess payments. It all starts getting a little more complicated when it is discovered that most insurance companies may vary the level of excess for different items in your contents insurance policy.
An example of this would be a company asking for £100 in compulsory contents insurance excess for accidental damage but a higher rate of excess for emergency cover.
Working out how much excess you are going to pay involves thinking carefully about whether you are likely to be able to afford to pay a higher cost when making a claim. Another question is whether you will make a claim for small damages, which could affect or repairs or pay for them yourself.
Contents insurance excess is not the only thing to consider when surveying contents insurance quotes, but it is an important element of getting a manageable policy that still provides the cover that is needed.
7. Having decided what contents insurance policy you want it is recommended to shop around for a competitve deal. Many contents insurance providers are keen to get your business and will offer attractive contents insurance discounts on cover from time to time. It is important to remember that many contents insurance discounts will be part of an introductory offer and will therefore last for the first year, and may not be repeated after that. Online contents insurance discounts are often dependent on whether you take out other cover e.g. home insurance.
8. Perhaps the best way to ensure keeping the cost of contents insurance down is to work hard to build up a no claims bonus. Other ways of lowering your long term costs are to make sure there are strong locks, windows and security systems installed in your home.