Contents Insurance Explained

Unlike buildings cover, contents insurance is an optional part of a house insurance policy but this does not mean it is any less important.

A contents insurance policy protects those items both inside and outside your home that are not a permanent fixture or fitting. Coverage is available for most items no matter how big or small, for example your sofa, fridge freezer, carpets all the way down to your iPod, laptop and even your clothing.

Here at moneysupermarket.com, using our contents calculator you can add up the value of all your possessions you wish to insure then using our price comparison tool, you can compare quotes from the leading UK insurance companies and find the cheapest contents insurance policy for all your possessions.

How does a contents insurance policy work?

Contents cover insures your possessions against loss, damage or theft. This is not just limited to your possessions inside your house as it is also possible to insure your garden furniture and even your garden's plants.

There are limits imposed on a policy as to how much you can insure and this can either be a collective limit or a single item value limit, usually around £1,500. If the total value of your possessions or single items exceed these limits you will need to get them insured with a specialist insurance company. This can increase the single item value limit up to £150,000 and the collective value up to £1million.

There are two types of policy available, indemnity insurance and the more expensive “new for old” policy.

• Indemnity insurance - This will take into account 'wear and tear' and also the depreciation in value of the item over time. For example a carpet bought five years ago for £800, may now only be worth £200 so the claim will only reflect its current value.
• “New for Old” policy - Whilst this is a more expensive option, for electrical goods an furniture it may be ideal for some people. This will not take into account the condition, age or depreciation in value of the item and your claim will reflect what you initially paid for the item. For example, your broken fridge-freezer may now only be worth £100, but your insurance company will replace it with a brand new one, up to the value you first paid for it.

There are additional elements that can be added to a policy but this will come at an extra cost. Policies can include cover in the event that you are injured in your home, and legal cover is also available in the event that a guest or visitor is injured due to negligence or lack of upkeep of the property.

Now move over to part four where we will take a look at the different types of home insurance policy.

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