- Home contents insurance, also known as personal property coverage, protects the belongings inside your home.
- Most contents insurance policies protect against damage and loss resulting from fire, floods, theft, and other natural disasters.
If you own a vehicle, pay for medical insurance, or have a life insurance policy through your employer, you already know how important it is to protect yourself from risk and liability. That’s why it’s essential for homeowners to have home contents insurance to safeguard their belongings from unforeseen incidents like theft or damage.
To help you choose the right plan for your needs, here’s everything you need to know about home contents insurance.
How Does Contents Insurance Work?
Unlike dwelling and home structure insurance, which covers the physical building, home contents insurance — also known as personal property coverage — protects the belongings inside your home. In case of a fire, flooding, theft, or other event, contents insurance allows you to recover the fair market value on items covered under the policy.
Contents insurance is also a requirement of most mortgage loan applications. To protect their investment, banks and lenders need to know that your property is protected from catastrophic loss or damage.1
What Does Contents Insurance Cover?
According to Forbes, 72 percent of homeowners don’t understand what is included in their home insurance coverage.2 Most contents insurance policies protect against damage and loss resulting from fire, floods, theft, and other natural disasters. At-fault insurance, also known as accidental insurance, can also be purchased from insurers, but it is usually an add-on to your basic coverage.
Although various insurance companies offer distinct types of coverage at different price points, the following items are typically included in home contents insurance:
- Furniture and décor
- Clothing and shoes
- Entertainment, including games, DVDs, and music albums
- Electronics, and
Personal possession coverage can also be added to your contents insurance as an extension package to protect any items you remove from your home, such as mobile phones, laptops, and digital cameras. Depending on your lifestyle, you can add extension packages for the loss or theft of personal possessions during travel.
What’s Not Included in Contents Insurance?
Contents insurance is a specific type of insurance that protects personal belongings found inside your home. As such, here are a few of the main items that aren’t included in home contents insurance policies:
- House structure, including the walls, roof, exterior, foundation, and garage
- Items in your home that are firmly attached to its internal structure, such as sinks, showers, toilets, affixed tiles, carpeting, and decking)
- General wear and tear
It’s also common for contents insurance policies to have maximum coverage limits based on the value of your belongings. If you have high-value or luxury items, it may be more beneficial to insure them individually.3
What Types of Contents Insurance Are There?
In general, there are four basic types of home contents insurance policies available. Keep in mind that the names of specific coverage types may vary depending on your location.
Typically, the most straightforward type of contents insurance, this policy is assessed based on the number of bedrooms in your home instead of the specific value of its contents. To take advantage of this policy, homeowners should know their contents’ total value to ensure complete coverage. Standard coverage ranges from £40,000 to £50,000.4
This insurance coverage is based on a personal assessment of your belongings. Your review allows the insurer to provide coverage to a specific maximum dollar amount. Many homeowners prefer this type of policy because it provides blanket coverage.
However, it’s not without risk. If you haven’t calculated the total value of your contents, you may find that you’re underinsured when it comes time to replace lost or damaged items.5
Unlimited Sum Insured
To ensure you have enough insurance to cover the replacement value of your belongings, this option offers the most flexibility. Unlimited contents insurance is based on an estimated value of all contents in your home. As such, you don’t have to worry about whether you have enough insurance to cover replacement costs.
Keep in mind that most insurance providers have value limits, as well as limits on individual items. For example, a single item may have a replacement limit of £1,500 under unlimited contents insurance, which may not be enough to cover the item’s full value.
What to Consider When Buying Contents Insurance?
Each household has different belongings and different needs for insurance coverage. As you think about your options for home contents insurance, consider the following key factors.
Strive for Accuracy and Honesty
When you complete an inventory of your personal belongings and give that information to the insurance assessor, you must be honest and accurate. Providing false information to the insurer can get your application rejected or result in your future claim not being honoured. An inaccurate assessment can result in insufficient coverage or too much coverage with unnecessary premiums.
Ask Questions About Exclusions and Conditions
When you purchase home contents insurance, it’s crucial to take the time to ask questions and read the fine print. Most insurance policies have detailed inclusions, exclusions, and conditions that protect both you and the insurer. By asking questions and clearly understanding your coverage, you’ll buffer yourself against future disappointment.
Where Can I Buy Contents Insurance?
Once you understand the type of contents insurance you need and the value of your personal belongings, you can begin to shop for the best prices and coverage options. Here are a few of the most common ways to purchase home contents insurance.
An insurance broker acts as a liaison between you and the insurance company. Buying your personal property insurance through a broker can be an excellent option if you’re a first-time home buyer or if you’ve never purchased insurance before.
Brokers also work for you. As such, they strive to get the best rates, coverage, and packages for your needs.
Going directly through an insurance provider is the most common way to purchase home contents insurance. An insurer can answer your questions directly and provide guidance on the best policies.
As an added benefit, home contents insurers are often insurers of other things like vehicles, life, medical, and pets. This overlap gives you opportunities to bundle insurance plans for lower premiums.
Comparison and Review Sites
Websites that compare and review multiple insurance providers are a great way to choose an insurer. These sites outline specific aspects of plan coverage and allow you to see exactly which policies have the benefits and features you need. Comparison sites also allow you evaluate plan prices so you can choose the most affordable option for your household.6
Home contents insurance is the preferred way for homeowners to protect their personal belongings. From furniture and artwork to clothing and electronics, contents insurance gives homeowners peace of mind knowing they can replace items lost or damaged due to fire, flood, theft, or other external causes.
No matter the size of your home or the value of the contents inside, it’s essential to have a comprehensive home contents insurance policy.7