Contents insurance – How to get it right and why it matters that you do
It’s very important not to under insure on contents.
If you do, it can cost you because an insurer will cut the pay out on items if you ever have to claim.
This is often misunderstood by people buying insurance; but it works like this.
If the total value of your contents is £50,000, for example, but you only insure them for £25,000, then if you claim for an item, you’re likely to only receive 50% of the deemed value of that item because you’re 50% underinsured.
Put another way, if you put in a claim for £5,000 and it’s decided you’re 50% underinsured overall, even if that claim is accepted in all other regards, you’ll still only receive £2,500.
Keeping on top of contents insurance is important, but the big savings are still to be made switching home insurance.
How to get contents right
So, it can be a big mistake to try to save money on your contents premium by lowering the estimate of the total value of your contents.
In the event of a claim, the insurer will make a decision about what your contents are actually worth.
There are plenty of free online calculators that can be used to generate a reasonably accurate assessment of the worth of your contents.
But the process is not rocket science - you just need to know what things cost!
So you can simply do it yourself by making a list and keeping records, perhaps by taking photos of items, or a detailed video of rooms.
Generally you want to consider ‘new for old’ cover which means calculating what you’d have to pay to replace an item, rather than listing what you paid for it.
Go around each room in your house and list everything that you consider to be contents.
How to tell what is contents anyway?
With some items it’s pretty obvious that they are contents – things like a TV, a sound system and so on.
But with other items it’s not always so straightforward.
What about that expensive kitchen worktop you’ve had fitted?
The general rule on contents is to imagine turning your room upside down. What falls out of place is contents, what stays put is covered by buildings insurance.
Once you’ve worked that out, make a list of every item and estimate a replacement price. Try and make these as accurate as possible.
Make sure you list everything in every room.
It’s a chore, but it will pay dividends in the event of a claim.
Once you have a list, add up the values; do the same for each room in your house.
Don’t decide to miss items or even rooms out to end up with a lower total, because an insurance company won’t do that when you make a claim.
The total you end up with is the new for old worth of your contents and the amount you need to insure for.
Online calculators really only make suggestions of items you may have and do the adding up for you. It’s just as easy to do it yourself.
The key thing is to make accurate assessments.