Getting Home Contents Insurance
Home contents insurance isn't a requirement enforced by mortgage lenders. It's an optional insurance product that protects your personal belongings. Contents insurance is highly recommended as the majority of us would not be able to afford to replace the entire contents of our home should they be destroyed or damaged.
Home contents insurance covers your household items against damage, theft or loss. Cover is usually offered for any items which are moveable, such as electronics, furniture and personal belongings. Structural items are usually covered by your buildings insurance.
Types of Home Contents Insurance
There are two main types of home contents insurance. A new for old policy covers the cost of replacing a lost, stolen or damaged item with a brand new equivalent. An indemnity policy is the cheaper option and will value your items based on depreciation and wear and tear. If you have lots of expensive electronic equipment then it is recommended that you opt for a new for old policy. Similarly, if you have possessions which are prone to depreciation then you should also consider new for old.
So how much cover do you actually need? Well this will be dependent on the value of all the items you own. Many people underestimate the cost of replacement, which is why it's recommended that you go through every room in your house and catalogue your possessions with a value.
Sum Insured or Bedroom Rated Policies
The majority of home content insurance firms will calculate your cover either through a sum insured policy or through a bedroom rated policy. A sum insured policy is based on the amount it would cost to replace every item in your house. It is your responsibility to value this correctly so that you don't end up underinsured or even end up paying over the odds for cover you don't need.
A bedroom rated policy is based on the amount of rooms in your house. This saves time as you don't need to list every item. The downside is that you could end up paying higher premiums and still run the risk of being uninsured.
Insurance Extras
Some policies will cover high value items and include accidental damage as standard however many will consider them as extras. It is vital to check the policy wording to see what is included and to ensure you are comparing like for like when shopping around.
Just like most insurance products there are plenty of optional extras to choose from. A popular extra is accidental damage cover which does what it says on the tin. Personal possessions cover is another optional extra which extends the protection of your belongings if its leaves the house such as satnavs, mobile phones, laptops and jewellery.
DISCLAIMER: All content is for guidance only and does not constitute individual financial advice.
www.homeinsuranceinfo.co.uk is not authorised by the FSA to advise on insurance matters.
