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.
Most policies cover loss or damage to your possessions,
while in your home, by:
Escape of water from tanks or pipes
Leaking oil from heating systems
Heave or landslip
Falling trees or aerials
Riot or malicious acts
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.
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
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.
Your policy can be either "replacement as new"
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.
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.
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:
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
between insurers so it pays to shop around.
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
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.
Remember, if you need advice on your policy you should consult
your insurance company, your broker or insurance adviser.
There are other valuable aspects to the cover given by your
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.