What Is Contents Insurance?

Contents insurance covers the cost of replacing your household belongings if they are damaged, stolen or destroyed. You can buy cover as part of a combined home insurance policy that also includes buildings insurance, or you can purchase a contents policy separately.

What does contents insurance cover?

Contents insurance provides cover for everything you would normally take with you if you moved home. Cover can vary depending on the policy, but will generally include:

• furniture – such as sofas, beds and wardrobes
• electricals – such as TVs, laptops and games consoles
• kitchen appliances – such as fridges, washing machines and dishwashers
• soft furnishings – such as carpets and curtains
• kitchenware – such as pots, pans and crockery
• clothing, jewellery and money
• books, DVDs, toys and video games.

Cover may also include the contents of your shed, garage or other outbuildings. Some policies will even cover the cost of replacing spoiled food if your freezer breaks down or there is a power cut that is beyond your control.

Cover for high-value items

When comparing contents insurance policies, you’ll need to look out for the ‘single item limit’. This is the maximum amount your insurer will pay out for any one item.

The single item limit will vary depending on the insurer but will typically sit around £1,500 to £2,000. Any items worth more than this, such as bikes, jewellery or laptops, must be listed separately on your policy if you wish to have them insured.

What does contents insurance exclude?

As with all types of insurance, it’s important to check the terms and conditions of your policy so that you’re aware of any exclusions. In most cases you won’t be covered for:

• wear and tear-related damage
• damage caused by pets
• misplaced or lost possessions
• faulty workmanship
• mechanical or electrical breakdown
• theft through unforced entry, for example if you left a window or door unlocked.

Some policies include accidental damage cover as standard. This would pay out for accidents such as spilling paint on your carpet.

Cover for bikes can be more limited, too. Many insurers will only cover bikes that are locked away in your garage or shed or kept in your home. And, as mentioned earlier, if your bike is high value you may need to list it separately or take out additional cover.  

Who needs contents insurance?

Unlike buildings insurance, your mortgage provider won’t require you to buy contents insurance when you buy your home. If you rent, however, your landlord may insist you have contents insurance as part of your tenancy agreement.

But no matter whether you rent or own your home, contents insurance can make good financial sense to avoid being left out of pocket if your belongings were damaged, destroyed or stolen.

Research by Nationwide building society shows that more than two million privately rented households in the UK have no insurance policy on their properties, despite the contents of an average property amounting to £25,126.

Can I add any extras to contents insurance?

When comparing contents insurance policies, you can typically pay a little extra to bolt on any of the following to your policy:

• accidental damage cover: protecting you for accidents such as smashing your TV screen or spilling wine on your sofa
• home emergency cover: providing cover for emergencies such as a burst water pipe or boiler breakdown
• legal cover: covering the cost of legal proceedings if you need to dispute a claim
• personal possessions cover: covering portable items, such as your phone, tablet or laptop, while you’re away from home (restrictions may apply, such as no cover for damage by liquid).

New-for-old vs indemnity cover

When taking out contents insurance you may be able to choose between new-for-old cover and indemnity cover.

New-for-old cover will replace any stolen or damaged belongings with brand-new items of equivalent value. Indemnity cover, on the other hand, will take into account the wear and tear of any items you claim for.

This is often the cheaper option but will only cover you for the current value of your possessions.

How much do I insure my belongings for?

Estimating the value of all your household possessions isn’t the easiest of tasks. Overestimate and you could end up paying more for your premiums than you need to. Underestimate and you could end up underinsured, resulting in your insurer only paying out a percentage of any claim you make.

The best way to calculate the value of your belongings is to go through each room of your home and make a list of all your possessions. Calculate how much each possession is worth and then add up the total. This will be the amount of cover you require.

Regular valuations of high-value items such as jewellery will also help to ensure your estimate remains as accurate as possible.

How can I save money on my contents insurance?

There are a number of steps you can take to reduce how much you pay for contents insurance:

• Shop around

The quickest and easiest way to save money on your contents insurance is to compare deals online. Look for the deal that provides the level of cover you need at the best price. Do this each time your insurance is up for renewal to make sure you stay on the best deal.

• Combine your contents insurance and buildings insurance

If you need to buy both contents insurance and buildings insurance, many insurers will offer a discount for a taking out a combined policy. (Note that you won’t usually need buildings insurance if you’re a tenant as this should be your landlord’s responsibility.)

• Pay annually rather than monthly

It will be cheaper to pay for your contents insurance in one lump sum each year than in monthly instalments. If you can’t afford to pay upfront, consider using a 0% purchase credit card to spread the cost interest-free. If you do this, pay off what you owe within the 12 months the policy lasts, otherwise you’ll end up paying for two lots of insurance at the same time.

• Only pay for what you need

When comparing policies, consider optional extras that are offered to you carefully. If you don’t think you’ll need them, don’t pay for them.

• Improve your home’s security

Installing the correct locks on your doors and windows, joining a Neighbourhood Watch scheme, and fitting a burglar alarm can all help to lower premiums.

• Pay a higher voluntary excess

Choosing to pay a higher voluntary excess (the amount deducted from your claim payment) is an easy way to cut the cost of your premiums. But make sure your excess is still affordable – after all, if you make a claim you will have to find that money.  

• Build your no-claims bonus

As with car insurance, many home insurers will offer a discount to those who have not made a claim on their contents insurance for a number of years. The longer you go without claiming, the bigger the discount.