Household Contents Insurance ::

What is Covered?

A contents policy covers just about everything you would take with you if you moved. Furniture, furnishings, household goods, kitchen equipment, food and drink, televisions, video, computer and audio equipment, clothing, personal effects, and valuables up to stated limits. Boats, caravans and motor vehicles are usually insured separately.

"Risks"

Most policies cover loss or damage to your possessions, while in your home, by:

Fire
Theft
Lightning
Escape of water from tanks or pipes
Leaking oil from heating systems
Storm
Flood
Subsidence
Heave or landslip
Falling trees or aerials
Riot or malicious acts
Explosion
Earthquake
Impact by aircraft, vehicles or animals


Many policies include accidental breakage of mirrors, glass tops to furniture and fixed glass in furniture.

Some policies cover accidental damage to televisions, videos, home computers and audio equipment. You can often extend your policy to cover such items as accidental damage to all your contents.

Only limited cover applies to any contents temporarily removed from your home.

"All Risks"

Policies can be extended to cover accidental damage or loss of valuable items which you may take out of your home. This "all risks" extension can cover such items as jewellery, cameras and sports equipment.

Exceptions and Exclusions

To be sure about these you must read your policy which, after all, is a legal contract. If there is anything you do not understand, ask for an explanation.

Common exclusions are theft if you have let or sub-let your house (or part of it) unless there is forced entry; sonic bangs; contamination from nuclear fuel or nuclear waste; and war risks.

There are usually limits on the value of any works of art, ornaments or jewellery and sometimes on high value goods like video equipment. Insurers may agree to raise these limits.

You may be required to pay the first part of a claim yourself - this is called an excess. Excesses are applied to a range of claims. Check these when you buy your policy and at each renewal date.

Some insurers allow a premium discount if you volunteer to accept an excess on all claims no matter how they are caused. The level of discount will increase with the size of excess you choose.

Claim Settlement

Your policy can be either "replacement as new" or "indemnity".

If you have a replacement as new policy you will be paid the full cost of repairing damaged articles or the cost of replacing them with equivalent new articles if they are stolen or destroyed.

With an indemnity policy, a deduction will be made from your claim payment to account for wear, tear and depreciation.

Most home contents can usually be insured on a replacement as new basis but not clothing and household linen. What you can insure under "replacement as new" varies between insurers and sometimes age limits apply. Remember to check your policy carefully.

Sum Insured

The sum insured is the total amount of money for which your contents are covered. It is the most your insurers will pay, even if your possessions are totally destroyed - say by fire or explosion. You must insure your contents for their full value. Some policies say that if you are under-insured, claim payments will be reduced. So remember, if your sum insured is too low you may have to pay out yourself to put things right. It is your responsibility to get the sum insured correct.

Read the following comments and use the chart to work out the full value of your home contents.

Calculating Values

Go from room to room, not forgetting the loft, garage and shed, writing down what it would cost to replace every item, new, at today's prices.

Even with a replacement as new policy, you should deduct, from clothing and household linen claims, an amount for wear, tear and depreciation. A man's suit, for example, is reckoned to have a life-span of around five years. For each year you have had your suit you should deduct one fifth of today's price of a new one. This is only a guide - the quality of property and its general condition will usually be taken into account.

Where it is difficult to establish the right figure - for example with valuables or antiques - an expert valuation may be necessary.

Enter your figures on the chart (Excel file above). If index-linking applies to your policy, the total is the sum insured you need. If your policy is not index-linked, add an amount for inflation during the year to come.

You may, of course, have other rooms and possessions not listed here.

Keep Up To Date

Make sure that your sum insured stays up to date. Many insurers help by linking your sum insured to the Retail Price Index (RPI). Your sum insured is automatically changed each month in line with the Index. There is no charge for any increase between renewal dates.

Remember two important points. First, index-linking can work properly only if your sum insured is correct to start with. If not, index-linking will make your original error worse. So be certain your sum insured is correct now. Review it every few years. If your policy is not index-linked, review it every year.

Second, remember to tell your insurers to increase the sum insured if you add to your possessions - perhaps by buying an expensive suite of furniture or CD player.

Keep receipts and valuations - these can be very helpful if you need to claim. Take photographs or videos of valuables and keep them with your policy.

When buying your insurance do bear in mind:

  • Some insurers operate no-claim discounts on renewal of the policy


  • You can get various discounts such as age related, if certain security is installed or if you pay the first part of the claim


  • Premiums vary between insurers so it pays to shop around.

Prevention

If you suffer loss or damage your policy can put things right. It cannot however compensate you for distress and inconvenience. So do everything you can to prevent the worst from happening.

Make every effort to prevent theft from your home. Some insurers will offer a premium discount if you have an agreed level of security.

Insulate pipes and tanks and make sure that your main water stop valve operates easily and that the family all know where it is.

Advice

Remember, if you need advice on your policy you should consult your insurance company, your broker or insurance adviser.

Other Cover

There are other valuable aspects to the cover given by your contents policy.

Alternative accommodation - if your home is so badly damaged that you cannot live in it until it is repaired, your policy will pay towards the reasonable cost of alternative accommodation. The payment can be as much as 20% of your sum insured.

Your legal liabilities - if, as occupier of your home you cause injury to someone or damage his or her property, your policy will pay the damages for which you are legally liable - up to 1 million plus costs in most cases.

You and your family are usually covered, up to the same amount, for liability in day to day life. For example as a pedestrian you may cause an expensive road accident.

As tenants - many policies provide some cover for your liability for damage to the building.

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