How much contents insurance cover do I need?

The sum insured is the total amount of money for which your contents are covered. It is the most your insurer will pay even if your possessions are totally destroyed. It determines the premiums you pay so it is vital you calculate the amount correctly otherwise you could lose out when claiming.

To get an idea of the sum insured go through every room in your housem including loft, garage, cellar and garden shed. Write down what it would cost to replace every item at today's prices - don't forget carpets, rugs and expensive wallpaper! The only exception is clothing and household linen where the value should be adjusted downwards to reflect wear and tear. A man's suit, for example has life-span for insurance purposes of five years, so for each year you have had the suit, it's present value should be reduced by a fifth.

The total will probably surprise you - most people under-insure themselves - but your contents insurance should be based on it. Some insurers offer a maximum amount of cover which, if sufficient to cover all your possessions, removes the need for you to calculate an accurate sum insured. If it is sufficient, most companies offer extra blocks of cover.

Are contents insurance policies all written on the same basis?

No. Most insurance companies offer two types of contents insurance policies. New-for-old polices, sometimes referred to as replacement as new cover, met the full cost of replacing items if they are stolen or destroyed. Alternatively, the cost of repair will be met if the items are damaged. Most household items apart from clothing and household linen may be insured on a new-for-old basis, but you should check the policy for exclusions. Contents insurance insurers usually apply an excess to every claim on a new-for-old policy.

Wear-and-tear policies, also known as indemnity policies, pay to replace pr repair your possessions, but with an appropriate reduction for wear, tear and depreciation. Becuse claims are smaller, premiums are lower than for equivalent new-for-old policies. Many insurers apply an excess to claims.

Do contents insurance policies contain exclusions?

Yes. Most policies contain a range of exclusions and limits on individuals claims and it is vital that you know what these are before buying a policy. Commonly, there are limits on the value of works of art, ornaments, jewellery or other expensive items. The contents insurance insurer may agree to raise these though it may be wiser to insure high-value items seperately. Most contents insurance policies will not meet a theft or damage claim if you let or sub-let your house and there is no evidence of forced entry.

What should I ask an insurer before I buy a contents insurance policy?

There are 10 Key questions:

1. Does the contents insurance policy cover accidental damage? Most policies offer cover against accidental damage such as spilling red wine over an expensive carpet, but you will probably have to pay extra for it. It can prove invaluable.

2. Does the contents insurance policy offer a discount on premiums? Some insurers cut contents premiums for people over 45, security-conscious home owners, non-smokers and people with claims-free history. Discounts are available to those who combine their contents and building insurance or who use the smae insurer for their car and home.

3. Is the policy flexible? Some insurance companies automatically increase the level of contents covers cover at Christmas to accounts for the gifts you are likely to have around the home. Some increase cover for couples about to marry and who may have wedding presents stored at home. Others automatically provide cover for possessions lost away from home - on holiday, for example. Checks what your policy will and will not under such circustances.

4. Does the policy cover children who go to college? Some policies provide free student cover for household goods and personal effects. The amount may be up to 15% of the sum insured under your content insurance policy.

5. Does the policy cover the cost of repalcing locks in my home if my keys are stolen? Most insurers - but not all - automatically cover the replacement locks in my home if my keys are stolen? Most insurers - but not all - automatically cover the cover the cost replacement locks.

6. Does the policy provide cover if I accidentally injure another person or damage their property? Most policies pay damages for which you are liablly liable up a mininum of £1 million.

7. Is there an excess on claims? Most insurers apply an excess to claims.

8. Does the policy provide alternative temporary accommodation if my home is badly damaged and I cannot live in it? Most policies help towards the cost of temporary home. The payment may be as much as 20% of the sum insured.

9. Does the contents insurance cover the high-value items? Most contents insurance insurers impose a maximum limit on the level of cover for any single household item. If the value of some of your possessions exceeds this limit you should obtain seperate cover from a specialist high-value insurer.

10. Does the contents insurance policy offer legal help in an emergency? Some insurers offer legal expenses cover and though this will increase your premiums, it could prove useful if you need help to settle a claim with a third party. Typically, protection includes cover for personal injury claims, employement disputes and litigation involving the home. Claims for libel, divorce or crminal litigation are usually excluded.

contents insurance guide part 2 >>>