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Want to get the best insurance deals? Our guide should help.
If you read our blog yesterday, you’ll already know that it’s important to have contents insurance for your personal possessions, just in case the worst happens and you’re left needing to replace something damaged by fire, theft or flood. But you don’t want to be paying over the odds for it. Neither do you want to be under insured, as that could lead to your insurer refusing to pay out or reducing the value of your claim, which would add further stress to an already stressful situation. So, how do you get the perfect contents cover for you? That’s easy – follow our guide.
But, before we go on any further, we need to stress that we can only provide general tips here, and not all of it may apply to your specific personal circumstances. So we advise that you check carefully what is and is not included in any policy before you buy.
Get the right policy
The first thing you need to think about is what kind of policy you need, and want, to cover your things. There are a number of policies available, so we’ll run through them one by one. First you need to decide on how much you’d like to be reimbursed if the unexpected happens. The policies you can choose from are:
new for old – this provides you with the full amount of what the items will cost you to replace brand new. Whilst this may be the more expensive insurance option, it will mean that you can replace all your items, new, straight away.
indemnity – this kind of policy will give you an amount that equals what the item is worth right now. This is the cheaper of the two options, but may work out a false economy. This is because it’s likely that what you’ll be saving on the premium amount won’t cover what you’d need to replace items new. So, unless you’re ready to have second hand items, you’ll more than likely have to wait a period of time to replace things, as you save the money to purchase new replacements. For example if you claim for a TV that you bought new a couple of years ago you may not get enough back to enable you to buy a new one.
Next, you need to think about how you want the value of your possessions calculated on the policy. There are three options to choose from:
sum insured – in these policies you work out how much you think the contents of your house are worth. This is the most cost effective way to insure your possessions as, if you do it properly, and we’ll show you how later on in this article, you get the amount of insurance just right. So there’s no under-insuring, or over-insuring of your possessions, both of which could be costly.
unlimited sum insured – this is exactly what it sounds like, there’s no limit on the amount you can insure, so you never have to worry about being underinsured. However, policies like these are, as you would expect, more expensive than those with a limit placed on the amount. These would be useful if you had a large number of items over the £1,500 single valuable item limit, usually found in most policies.
bedroom rated – this is when you hand over the estimation of how much your possessions are worth to the insurance company. They’ll provide a guesstimate of what they think your possessions are worth based on their own formulas. Most policies like this use an average amount of £40,000 to £50,000 to cover the replacement of your belongings.
Of course the benefit of this is that you don’t have to work out how much cover you need yourself. But, these kinds of policies will only be appropriate if you have what you think is an ‘average’ amount of possessions. In all honestly, you’d probably need to do a quick adding up of your possessions to make sure you fit in the £40,000-£50,000 bracket anyway, so you may as well do a sum insured policy and know that you are not over or under insuring your stuff. Both of which can end up costing you in the long run.
Next you need to think about any additional extras you may want covering for, like accidental damage.
You may want to add this, just in case. It’ll cover you for things like splashing paint on your carpet, or one of your kids spilling their juice all over your brand new digital camera. It will usually add on an additional premium as well though, so you may want to think about whether it’s worth it, especially if you don’t have children or pets – two of the main culprits when it comes to accidental damage.
Things over the usual valuable items limit of £1,500
First it’s a good idea to look at how a particular insurer defines a valuable item. It can vary between different insurance providers, so it’s worth taking some time to find this out.
If you have items that are considered ‘valuable’, according to the insurers’ definition, and you think they may be of high value, over £1,500, you need to check the individual insurers’ terms and conditions for the ‘single article limit’. This is the maximum amount the insurer will pay out for any single item. Things that might be in this bracket are engagement rings, expensive electronic equipment, like a custom laptop, or a mountain bike.
If you do have these items, you should tell the insurer when you apply to get your quote, as it’s likely their addition to the policy will generate an additional premium. You’ll have to provide proof of purchase and you’ll probably be asked to provide some evidence of their value too.
Insuring things you take out of your home
Like most of us these days, you probably have a mobile phone, laptop, tablet or camera that you take out of your house on a regular basis. If you do, you should think about adding ‘personal possessions cover’, so that should anything nasty happen, you’re covered. This addition will also cover things like your wallet and jewellery too, but as with all add-ons it may up the price of the premium too. Some policies will even go as far as covering you for taking these items abroad, but you’d need to check that with the insurer.
If you have an iPhone, or any another electronic device that stores digital copies of music or books, it’s worth checking what you’ll be reimbursed for if the device is damaged or stolen. Some policies cover you to replace the digital content, other don’t. This could be important because you may have hundreds’ of pounds worth of music or books on a device and, if it goes missing or is damaged and you can’t access it, are you able to download it again for free, or will you have to pay? For example, if you own a Kindle and it’s stolen, you can access nearly all the content you had on it previously just by logging into your Amazon account.
Some companies do have a clause that covers you on an ‘all risks’ option. This means that pretty much any eventuality is covered, but it will, as you would expect, cost you more.
It’s also worth thinking about protecting all your electronic devices with a password. If they are stolen and the thief runs up a huge bill, either making calls, if it’s a mobile phone, or using apps, if it’s a tablet or laptop, you will probably not be reimbursed for this expense by your insurer. However, you may be asked to pay any bill, up to a limit of £100, by your mobile or internet provider. While this won’t entirely protect you, as they can just remove your SIM card and put it in another phone, it does show that you’ve done all you can to protect your device.
Some policies offer an option to have legal cover added for an extra premium, others already have it included. This might come in useful if you ever need to go to court, for example if a fire in your home is found to have been caused by a faulty appliance. If the manufacturer refused to pay up for the damage, you could take legal advice and pursue them through the courts for what it’s cost you.
It can also cover you if you’re sued or taken to court by another person. This could happen if, for instance, you damaged a neighbours’ property because you allowed your bath to run over and flood the property below you.
However, as always, we’d advise that you speak to any potential insurers to find out what is and what is not included.
Home Emergency cover
This add on really depends whether you own your home or not. If you do, you might want to consider it as it’ll cover things like a pipe bursting and flooding your kitchen or your boiler breaking down in the middle of winter, leaving you shivering. With home emergency cover the insurer will usually get an approved tradesman or repairer to you within a set time. But, if you rent, these things would be taken care of by your landlord or agency anyway.
In any case, if you wanted to make a claim for any damage, from a burst pipe for example, that’d probably already be covered in your standard contents policy anyway. And, some policies limit the number of times you can claim under this clause, so that’s something else to think about.
So, the best advice we can give you here is to chat through your options with a potential insurer to make sure it’ll cover you for the things you may need.
Right, now you know what kind of cover you want, and how much you’d like to be reimbursed, it’s time to work out how much your possessions are worth. Make sure you read tomorrow's blog to find out how to do this as it's vital if you want to make sure you get the right amount of cover.
by Shelley BowersBack to blog home