Home insurance Contents insurance explained

Don't undervalue your home contents when taking out insurance

Contents insurance generally covers damage to your possessions due to fire, lightning, explosion or earthquake, theft (or attempted theft), riots or vandalism, storms or flooding, subsidence, falling trees, moving objects (such as a cars hitting your home) and escaping or leaking water or oil (from a tank or pipe, say).

Contents insurance also usually covers:

• Your legal liability as occupier of the house, eg if a visitor has an accident and injures themselves
• Cost of accommodation and storage if you can't live in your home because of damage (eg fire, flooding etc)
• Some accidental damage to stereo equipment, TVs, computers, DVD players and any glass in furniture (eg a glass tabletop)
• Replacement keys and locks, and locksmith's fees if you lose or damage your keys
• Damage to TV and radio aerials, and satellite dishes
• Loss of food if a freezer breaks down
• Theft of cash from your home
• Contents of your outbuildings (although the amount of cover varies a lot from policy to policy and there may be lower limits for theft).

Optional extras

You can often pay for extra possessions cover. We outline the most common additions below.

Accidental damage

Standard contents policies include some cover for accidental damage - including stereo equipment and glass in furniture - but don't cover accidental damage to goods or furnishings.

For an extra premium (typically less than £100), you can extend cover to these items. This can be useful if, say, you have young children. But if your household is less active, accidental damage cover might not be worth paying extra for.

Personal possessions (all risks)

Personal possessions is another extra cover you can add to your contents policy (sometimes called 'all risks' cover). It covers loss of your possessions away from home, eg a handbag or camera. There are restrictions on what's covered, so check with the insurer so that you know what you are paying for.

Legal expenses

This covers the cost of legal proceedings if you need to bring action or defend a claim. It typically covers the legal expenses incurred in most personal injury, consumer, property and employment disputes, as well as for any award of the other party's legal costs.

A few insurers include this cover as standard when you buy house insurance, but most charge an additional premium for it.

Common exclusions

There is usually a limit on the amount of cover for high-value items, such as jewellery or audio-visual equipment. If you have possessions of a particularly high value, check that they will be properly covered by any policy you're considering.

Some policies won't cover any liability arising from your business or trade if you are working from home.

Other common exclusions

• Losses due to theft if you've let or sub-let your house, unless there are signs of forced entry
• Damage (from, say, a leaking central heating system) when the house is unoccupied for more than a certain number of days, usually 30
• Cost of replacing an entire set (of furniture or units, for example) if only part of the set is damaged. You'll usually receive only the cost of replacing the damaged parts.
• Items like car sat navs. Even if they're kept in your home they won't usually be covered by contents insurance, and often aren't covered by your car insurance policy either.

It's important to read the policy carefully to make sure it provides the cover you need and that you understand your responsibilities (such as locking doors and windows when you leave the property).

Policy choices

There are several different types of policy you can choose. It's important to go for the right one to make sure you don't end up out of pocket if you need to claim.

New-for-old vs indemnity

With new-for-old cover, the insurer either pays the full cost of repairing damaged items or pays to replace them with equivalent new items if they're stolen or destroyed.

Indemnity policies, on the other hand, deduct an amount for wear, tear and depreciation from any payout. Although an indemnity policy might be cheaper than new-for-old cover, we don't recommend them, because they could leave you much worse off if you have a large claim.

Sum insured vs bedroom rated

You can choose the level of cover you need in one of two ways. A bedroom-rated policy is based on the number of bedrooms your home has (often subject to a maximum amount of cover).

Alternatively, with a sum-insured policy, you work out how much cover you need, and the insurer calculates your premium on that basis. It's not always obvious which type offers the best value, so we suggest you get quotes for each before deciding.

Home security

Most insurers will insist on a minimum level of security before they will take on your business, such as deadlocks on some or all external doors. These locks will usually need to be 5-lever mortise locks and have to meet a minimum standard - usually BS3621. You will probably find that your insurer expects you to have locks on all your accessible windows as well, although some insurers don't make this a requirement. So putting locks on all your basement and ground-floor windows, plus any that may be accessible by climbing a drainpipe or wall, will increase the number of companies likely to cover you.

Some security features such as a burglar alarm might get you a discount from some insurers, providing you arm it when away from the property, although probably not enough to justify installing one from scratch. If you already have an alarm though, it's probably worth shopping around for the cheapest premiums. It's important to make sure the alarm is professionally installed and maintained annually - installing it yourself may mean your insurer doesn't count it when calculating your premiums. If you're thinking of getting a burglar alarm fitted, it's worth making sure it meets SSAIB or National Security Inspectorate (NSI) standards.

Other security measures such as CCTV might give you peace of mind, but won't make any difference to your insurance premiums. It could be worth visiting the national Neighbourhood Watch website, OurWatch, if there's an active scheme in your area though, as you could get as much as a 5% discount.