Are your household contents adequately insured?

home contents insuranceA recent report by the Association of British Insurers (ABI) aims to shine a light on the real value of home contents insurance and it makes for illuminating reading. They’ve calculated that the country’s contents adds-up to nearly £1 trillion and that the average household now owns £35,000 ‘worth of stuff’.

It’s a surprisingly high figure and what’s worrying is that over a quarter of homeowners don’t have contents insurance. Do the maths and that’s 7.5 million households without cover, putting £266 billion worth of contents at risk. Considering that the average home contents policy costs just £141 a year (or less than £3 a week) it’s a high-stakes gamble that could have costly consequences.

One likely reason for the shortfall is that householders make the mistake of thinking that ‘home insurance’ automatically covers property and contents, but it’s actually a generic term that refers to two distinct products: buildings insurance and contents insurance.

Buildings insurance covers the fabric of the building (including fittings) while contents insurance covers everything that you would take if you moved home. Mortgage providers often insist on buildings insurance as a condition of the loan agreement, whereas contents cover tends to be optional. Buildings and contents insurance can be purchased separately, but it’s often more economical (and easier to manage) to buy a combined policy.

Contents insurance is designed to protect your possessions against loss or damage caused by theft, fire and flooding. However, Terms and Conditions vary between providers and it’s essential to read the small print to know exactly where you stand. Keep an eye open for:

Total indemnity Overall contents cover is generally set somewhere in the region of £50,000 which sounds like a lot, but if you add-up all your household possessions (including everything from carpets and curtains to clothing) you may be surprised.

New for old Most contents insurance policies will replace old items with new (which is important to remember when you’re calculating how much insurance is needed).

Single item limit Policies typically limit the amount you can claim for a single item to somewhere between £500-1000. Additional cover can be arranged for more expensive belongings such as jewellery and electronic items.

Away from home Some policies provide cover for belongings outside your home such as lost laptops and misplaced mobiles.

Additional extras Most insurers offer a variety of add-on products, such as accidental damage or home emergency cover, which can make shrewd financial sense.

A word of warning about underinsurance It’s estimated that a quarter of homes are underinsured (by an average of 30%) and householders often find out the hard way. To make sure you have adequate cover, methodically work your way from room-to-room and make an inventory of your possessions. Take photos of anything valuable, in case you need to make a claim, and add-up the overall replacement value.

It’s worth noting that most insurers will only pay a percentage of a claim if a property is underinsured. On a practical level that means if your home is underinsured by 50% and you make a claim for £5,000, you’re likely to receive a pay out of £2,500 (which is another reason to make sure you’ve got the right level of contents cover).

With nearly 50 years’ experience, Quoteline Direct is one of the country’s leading home insurance brokers. Whether you’re looking for buildings insurance, contents insurance or a combined policy, we’ve got you covered. To find out more, or to arrange competitive cover, visit our home insurance page or Tel: 0161 874 8032 to speak with a member of our team.


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