House Contents Insurance

What it covers

You generally get cover for all the movable possessions you and your family normally keep in your home, including furniture, household items, clothing, and so on, and possessions kept in outbuildings, such as garden tools kept in the shed. The risks you're covered against are similar to those which apply to house buildings insurance ).

Types of policy

There are two basic kinds of policy - 'standard' and 'all risks'. Standard policies cover only specified events. All-risks policies cover any accident unless it's specifically excluded.

All-risks policies are generally expensive compared with standard policies (anything from £4 to £40 more for each £4,000 of cover depending on where you live).

A cheaper option is to take out a standard policy but add an all-risks extension to cover specific items or groups of items that you regularly take out of the house - for example, clothing, jewellery, cameras and so on. There's usually a limit on the amount that can be paid out for any one item. You're covered against loss or damage anywhere in the UK and, with most policies, abroad for a limited time (often up to 60 days). There may be an excess when you claim. Items covered by an all-risks extension don't need to be included in the standard policy cover.

Another option is to add an accidental damage extension on to a standard policy (with or without an all-risks extension), so that if, for example, a carpet is stained, the insurance company will pay up. There's usually an excess and some fragile items, such as glassware, might be excluded.

There are also two types of cover: 'indemnity' and 'new-for-old'. `Indemnity' means that the insurer deducts an amount for wear and tear from the amounts paid out; 'new-for-old' means that you can claim the full price of replacing or repairing an item. But, even with a new-for-old policy, certain items such as clothes and linen may get only indemnity cover. A new-for-old policy will cost you more than an indemnity policy - anything from £4 to £46 more for each £4,000 of cover - but the extra cost is usually worth it, because indemnity cover only could leave you badly out of pocket if you had to make a substantial claim. A further option is to have an indemnity policy which covers some things - for example, everything up to three years old - on a new-for-old basis. These policies aren't as good as the full new-for-old cover and usually don't cost very much less.

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How much to insure for

Getting your sums correct when deciding how much insurance to take out can be one of the biggest factors in getting any claim processed satisfactorily. The sum insured may be based on the householder's own estimate, or - more often - on a mortgage valuer's estimate. If this is too low, the insurance company will not pay more, and will also scale down smaller claims. The effect of this is that in a total loss - for example, if the property burned down - your under-insurance could result in a settlement which was less than the amount needed to rebuild the house.More On House Buildings Insurance

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