Do you need contents insurance?

Money Advice Service

Wondering if you need contents insurance? Think about how you would cope if you lost your valuables due to a robbery or a fire. This guide will help you understand how contents insurance works, how much it costs on average and what it does and does not cover.

What is home insurance?

It’s a good idea to review your contents insurance policy every year, as the value of your possessions might change over time.

This is a general term used to describe two very different types of insurance:

  • Buildings insurance – for permanent fixtures and fittings, like kitchens and bathrooms.
  • Contents insurance – for things you keep in your home, like furniture, TVs and personal belongings.

You can buy both types of insurance separately or, in many cases you can get them as a joint policy from one insurance company.

What is contents insurance?

This type of insurance covers loss or damage to all the things in your home which are not part of the structure or the building.

How much is contents insurance?

According to research from the ABI (2017), the average contents insurance policy costs £139 a year.

What does contents insurance cover?

All your personal belongings – in other words anything not physically attached to the building – will usually be covered for loss or damage.

This generally includes:

  • clothing
  • furniture
  • jewellery
  • electrical goods.

Different policies offer different levels of cover but generally you’ll be covered against theft, fire and flood.

‘Accidental damage cover’ is usually optional so don’t assume it’s included in your policy.

‘Personal possessions cover’ is also an optional extra.

This will cover items you take outside your home, including:

  • laptops
  • cameras
  • jewellery, and
  • mobile phones.

Some insurance policies will also cover you when you go abroad so if you lose or damage your possessions while you’re away, you’ll be able to claim for them on your contents insurance.

This is usually an optional extra which you pay a higher premium for.

What contents insurance doesn’t cover

As with all insurance policies there are a number of things which won’t be covered by contents insurance.

Depending on your policy, this could include:

  • wear and tear
  • the structure of your home such as the walls and the roof – you’ll need to cover these with a buildings insurance policy
  • damage to a computer caused by a virus.

Cover for valuables usually consists of:

  • a single item limit
  • a total amount for all of your valuables, and

many contents policies have a single item limit of just £1,500.

If you’ve got expensive items such as jewellery or works of art, you might need to buy extra cover for these when you take out your policy.

It’s important to fully understand the terms and conditions of your policy and any exclusions (things that aren’t covered) so that you know what you can and cannot claim for.

Need a specialist policy? Read our guide on When to use an insurance broker.

Do you need contents insurance?

The average home has contents worth £35,000 and a contents insurance policy costs on average £139 a year.

Source: ABI, 2018

Unlike buildings insurance, your mortgage provider won’t insist on you having contents insurance, but it’s a good idea in case the unexpected happens and your home is burgled or there’s a fire.

You’ll have an excess on your contents insurance which means you’ll need to pay a minimum amount every time you claim.

If you make a claim for £300 for example, and your excess is £250, you’ll only get £50 from your insurer.

Pros and cons of contents insurance

  • You can choose a ‘new for old’ policy to replace damaged or lost items.
  • If you have personal possessions cover you’ll be covered if you lose or damage items outside your home such as cameras, laptops and jewellery.
  • Some policies include a legal helpline where you can get advice on personal legal matters such as taxation and employment issues.
  • You can buy optional extras such as home emergency cover to pay for the call out and cost of parts if you need a plumber or tradesman.
  • You’ll need to pay an excess on every claim and your premium will probably rise the following year. Make sure you’re comfortable with the excess on your policy.
  • You need to fully understand the terms and conditions of your policy and any exclusions (things that aren’t covered) so that you know what you can and cannot claim for.
  • Most policies have limits on the amount of cover so it’s important to ensure that these are sufficient for your circumstances.

Next steps

This article is provided by the Money Advice Service.

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