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Contents insurance

Advice on contents insurance to cover your valuables and personal possessions against loss from fire flood or other disaster such as burglary or break-in. We look at the choices and compare the different types of repair and replacement cover

The contents of your home (including those belongings kept in your garage and shed) should be covered by a Contents policy.

Contents cover choices

The risks are much the same as with the Buildings policy (theft, fire, storm, flood etc) but can be extended to include extra options such as legal expenses or accidental damage. Imagine, for example, that your sofa is damaged by water pouring through your ceiling from a burst pipe, you'd expect to be covered under the normal policy … but what if you mark it by sitting down with oily overalls on. This is where add-ons like accidental cover can be a good idea.

Compare insurance cover

You'll have to do your homework comparing policies to discover which extras (if any) you require, which are automatically included in the premium cost, or how much additional expense is involved. If you are unsure of the wording, or what you'd be covered for, seek advice from the insurance company or an independent adviser.

Value of contents

Many insurers have made the cost of normal cover easy to calculate by using a simple formula. Rather than getting you to add up the value of all your contents, they simply use your postcode and the number of bedrooms you have. This is normally sufficient to cover your contents for a set sum - let's use £25,000 as an example - but this figure can vary from company to company, so it's worth shopping around.

Depending on your lifestyle, you might feel that the value is excessively high for your circumstances. How could you possibly have as much as £25,000 worth of contents? You may well be surprised if you start totalling their values up. It's actually quite a useful exercise, working room by room, sorting through drawers and cupboards that may not have seen the light of day in years!

New for old policies

Most policies now cover on a 'new for old' basis, so remember to calculate how much each item would cost to replace; not how much it cost you. This type of policy will pay out for a brand new sofa, even if you bought the original ten years ago, for a fraction of the cost. The cheaper alternative "indemnity policy" takes into account wear and tear to the item over the years, and any payment would reflect the sofa's age, and leave you short of funds to replace it.

After you've carefully checked every room and chucked out all those items you no longer want, you may discover that replacing the lot would come to say £35,000 rather than the £25,000. Be sure to take out cover for this higher sum because any claims on the policy might well be reduced or rejected if you under-estimate the value of your contents.