What is Home Contents Insurance?

Everything You Need to Know About Home Contents Insurance

What is Contents Insurance and Why Do You Need it?

Have you ever wondered how you’d cope if you lost your valuables to fire, theft or damage from flooding? Well, that’s what contents insurance is for – to offer financial protection if anything goes wrong in your home.

Contents insurance is a type of home insurance that covers loss or damage to all things in your home that aren’t part of the structure or building. Generally, this is whatever would go in the removal van if you were moving house, plus fittings such as carpets and curtains.

Understanding what contents insurance actually covers and why you need it can be confusing. To help you out, we’ve put together this comprehensive guide to home contents insurance to answer all your pressing questions.

Read on to find out how contents insurance works, what it covers and typical exclusions to watch out for.

What is Contents Insurance?

If your home is hit by an unexpected problem, like a fire, flood or burglary, it’s crucial that you have the correct insurance cover in place to put things right – that’s why you need home contents insurance.

Contents insurance covers all your personal belongings – anything not physically attached to the building – against the cost of loss or damage.

This is different to buildings insurance which protects the structure of your house and its permanent fixtures. You can purchase both types of home insurance as a joint home insurance policy or separately.

Contents insurance is totally optional, whereas, if you have a mortgage, the lender will usually require you to have buildings insurance. But, we would certainly advise insuring your possessions too, whether you’re a tenant or the owner.

How Does Contents Insurance Work?

There are two types of home contents insurance policies: indemnity and new-for-old.

Indemnity insurance accounts for any wear and tear of your belongings. So, for example, if a flood ruins your five-year-old rug, the payout would likely be enough to purchase another five-year-old rug.

Whereas, if you have new-for-old contents insurance, your payout should be enough for you to buy a brand new rug.

Given that new-for-old payouts are usually higher, these insurance policies tend to cost more than indemnity home contents insurance policies.

What Does Contents Insurance Cover?

Home contents insurance policies can vary in terms of what exactly they cover – but they tend to include:

– Clothing
– Furniture
– Jewellery
– Electrical goods

Usually, you’ll be covered against theft, fire and flood, but cover for accidental damage tends to be an optional extra.

You can also add ‘personal possessions cover’ for an extra cost. This is sometimes referred to as an ‘all-risks extension’ which covers items you take outside your home, such as:

– Laptops
– Cameras
– Jewellery
– Handbags
– Mobile phones/tablets

Some contents insurance policies will also cover you when you go abroad. So, if you lose or damage your possessions while away, you’ll be able to claim for them on your policy. Again, you will have to pay more for this optional extra.

What Does Home Contents Insurance Not Cover?

With all insurance policies, you will find that there are things that aren’t covered by contents insurance. These could include:

– Wear and tear
– The structure of your home
– Fixtures and fittings
– Damage to a computer caused by a virus

Most contents insurance policies also have limits on the value of the possessions they will cover. This will either be a single-item limit (often around £1,500 per item) or a total amount for all of your belongings.

This means that you might have to pay a little extra for any particularly expensive items you want covered, such as valuable artwork, fine jewellery and electrical items.

What are the Different Types of House Contents Insurance?

There are three main types of house contents insurance policy available, including:

– Bedroom-rated: the insurer works out the amount of contents cover you need based on the number of bedrooms you have. These policies typically provide between £40,000-£50,000 of cover as standard.
– Sum-insured: rather than the insurer, you have to calculate the amount of cover you need.
– Unlimited-sum insured: all your contents are covered without limit, so you don’t need to worry about being under-insured.

How Much Contents Insurance Do I Need?

So, now we know what home contents insurance is, how much do you need to cover all your belongings?

Unfortunately, there is no simple answer to that question. How much content insurance you’ll need will depend on how much your possessions are worth.

Ideally, you want to have enough contents insurance cover in place to allow you to replace everything you own if something unexpected should happen to your home.

To get an idea of how much contents insurance you need, go room by room and add up all your items – don’t forget all that stuff in the loft, the garden, the shed and the garage.

Make sure you’re as thorough and as accurate as possible when adding up your belongings. Valuing items too low could mean you’re not able to replace them properly when damaged. However, valuing them too high could mean paying more than you need for your policy.

How Important is it to Have Contents Insurance?

While you don’t have to purchase contents insurance, we believe that it is super important to have your belongings covered.

If you have a mortgage, your lender will likely require you to have buildings insurance in place, but whether you get house contents insurance is entirely up to you.

So, is it worth getting contents insurance?

Nobody enjoys shelling out for insurance and, if it’s optional, you might think twice before arranging cover. But, it’s important to think longer term – how would you manage if your home was burgled or damaged by fire and you didn’t have contents insurance?

At the end of the day, it’s totally up to you to weigh up the peace of mind against the cost of getting cover.

How Much is Contents Insurance?

So, given that the main con of getting house contents insurance is the price, what actually is the average contents insurance cost?

On average, contents insurance costs £12 a month in the UK, but basic policies can be found for £6 a month.

Ultimately, however, how much your contents insurance costs will depend on several factors, including:

– where you live
– the value of your possessions
– whether you add extras, like accidental damage cover or personal possessions away from home

Where Can I Buy Home Contents Insurance?

Once you’ve decided that you’re going to purchase contents insurance, you might be wondering where you can buy it. Don’t worry – we have you covered.

Comparison sites provide a great way to find cheap insurance that suits your needs. However, it’s important to remember that the cheapest policy isn’t always the best for you, so don’t simply pick the first one you see.

You can also purchase contents insurance direct from the insurer. Not all insurers are covered by comparison sites. For example, Aviva, Zurich and Direct Line are just some of the big names that don’t appear – and their policies can only be bought directly from them.

Finally, you can use an insurance broker to help you find the best house contents insurance policy for you. They can help get you the most suitable insurance for your circumstances, so this might be the best option for someone with complicated needs.

Contents Insurance for Renters

If you’re renting your home, the landlord is responsible for insuring the building and fixtures. So if there;s a burst pipe or your boiler breaks, ask your landlord straight away to fix the problem as it should be covered under their policy.

If your rented property is furnished by the landlord, it is also their responsibility to insure their own contents as well.

However, if you want to cover your own personal possessions, you’ll need to get standalone flat contents insurance. Depending on your living situation, it is usually possible to get contents insurance for the entire property or just for one room.

If you decide to insure the entire flat or home-share, you should note that being the named person on a policy can bring unintended consequences. If, for example, your housemate makes a claim, it will affect everyone else’s premium when it comes to renewing your policy, even if it was solely their fault.

Your claims record can follow you for up to five years. So even if you move out and change home insurance provider, you may still have to declare the incident which will drive up your premium.

Alternatively, if you choose to opt for room-only flat contents insurance, you’ll need to have a lock on your door to be eligible for theft cover. Belongings in communal areas are also unlikely to be covered unless there is a sign of forced entry into your home.

Contents Insurance and Working from Home

If, like many people, you have had to set up office in your own home since the start of the Covid-19 pandemic, this could affect your contents insurance premium.

Computer-based work is generally covered by home contents insurance. Home insurers don’t usually need to be notified if you’re doing more of this at home rather than in the office.

Similarly, if you’ve taken expensive equipment home from your workplace, it should be covered by your employer’s business insurance, so again there’s no need to tell your insurer.

However, if you’ve purchased new equipment or furniture yourself, you may need to increase your contents cover limit to account for this. You can do this by contacting your insurance provider either online or over the phone.

Should Students Get Contents Insurance?

Many students often assume that all the belongings they take to university are covered by their parents’ contents insurance – this is not always the case.

Before you go, ask your parents to check their contents insurance and find out whether your personal possessions are covered while you’re away from home.

Some cover might be provided by your parents’ policy, but this might not be up to the level you need. In some cases, it might be worth buying your own contents-only insurance.