How much home contents cover should you get?

If someone asked you how much it would cost to replace the entire contents of your home, what would you say? £10k, £30k, £50k…? Some recent research[1] suggests that the average amount people estimated, was as much as 45% below the actual value!

Shocked? So were we. Especially given that this can impact every claim you make. Because of something called the ‘averages clause’[2] if you don’t have enough cover, even if the claim is for a small amount, the insurer can choose to reduce the payout. For example, say you’re insured for £25,000, but actually own £50,000 of contents. Now imagine £5,000 worth of items are stolen and the insurer assesses your property, they’ll only pay out £2,500 in proportion to your cover level.

Insurers don’t tend to charge that much for adding to your cover level, so its certainly worth erring on the side of caution. But where to start?

What to include and how to value it

First things first, what items are part of your contents insurance and what is covered by your landlord’s buildings insurance. An easy way to think about it is, imagine tipping your home on its head. Everything that falls out, is considered to be part of your contents so this includes any freestanding fridges, bathroom cabinets, etc. where everything which stays in its place like flooring or the built-in-oven is part of the building.

Ok so now we know what’s included, how do we go about valuing all items? Especially that rug with the big tomato sauce stain? Most insurance policies are ‘new for old’ on most items, meaning you should value items at the cost of replacing them new, rather than their current resale value (as this is what the insurance would pay out). For any items which are difficult to replace such as antiques or limited-edition artworks or books you should enter the current value (you may need to get an expert valuation for this).

But what with that diamond brooch you inherited? Well any valuable items worth more than a certain amount, depending on your policy, should be individually listed on your policy in order to be covered (you’ll usually be prompted to do this when taking out cover).

Lets start calculating

Next, you’re ready to whip out that pen and paper. Just kidding, we’ve built a contents calculator which will help you accurately list all the items in your home, room by room. Note that clothes, curtains and soft furnishings, like carpets and rugs, are the item groups most often undervalued.

However, your possessions aren’t the only thing you should think about. What if disaster strikes and your home becomes temporarily uninhabitable, the cost of alternative accommodation is one that’s often forgotten but should be included in your total cover.

Also, some policies (like ours), include tenants liability cover, which pays out if you accidentally damage your landlords property. You should include that in the cover amount too; a sensible amount to put in is the value of your security deposit.

We’ve now calculated the total coverage level you require today. But what will you buy tomorrow, next week or next month. People continue to buy new stuff but often won’t remember to update their insurance so best to build in that bit of buffer.

When using our contents calculator, we’ll prompt you to remember all of these extra items.

When setting our own cover levels, we wanted to see how much extra cover costs, so we looked at a sample set of 1-bed flats as well as 4-bed semi-detached houses and found that for the flats an increase in cover level from £20k to £50k would only cost on average an additional £6 a year where the extra cost for the same increase in cover for the 4-bed house comes to £15 per year[3].

Since that’s really not very much, and it could be a lifesaver if something went really wrong, we have set the default level of cover for our policies at £50k.

If our contents calculator says you require a higher level of cover, we can’t currently provide you with cover but you can sign up to our newsletter below and be kept up to date for when we launch additional cover levels.

Check out our contents calculator by clicking below. If you have any questions about it, just hit the contact us button on our homepage.

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