What is contents insurance? (and what is it not?)

by | Thursday 1st Mar 2018 | Mortgage Insights

woman discussing contents insurance

Close to 16 million adults have no contents insurance according to a Financial Inclusion Commission (FIC) report published in November 2017.

It found 60% of those earning £15,000 or less per year have no contents cover – and few would be able to replace their belongings with savings. Being young, having a low income or living in a rented property are all factors behind not having home insurance, according to the report.

With insurers paying out more than £8 million a day in property insurance claims according to commission chair Sir Sherard Cowper-Coles, we feel it’s important to underline the benefits of contents insurance policy that not only protects possessions, but also gives policy holders peace of mind.

The benefits of a contents insurance policy

That latter point can be worth the investment alone for many, with contents policies protecting against numerous scenarios that could potentially damage private possessions. Here are just some of the benefits a contents insurance policy can provide:

The insurance covers the cost of your possessions such as your television, furniture, carpets and much more besides. Some policies can also cover goods in your outbuildings should you have them.

A contents policy can cover your possessions in the event of fire damage, floods, storms and other natural disasters, vandalism or malicious damage, and theft. Policies could also cover theft outside your property (while abroad), garden furniture and equipment, and accidental damage.

Different policies can have different features such as replacing old items for their equivalent price today, indemnity cover to take into account items’ wear and tear, all-risk insurance which can offer cover outside the home, legal cover which can help compensate for injury or neighbourly disputes, freezer cover should your food become inedible, sports equipment cover and potentially more.

Those with a mortgage could already be covered in some ways by their buildings insurance so it’s worth checking the small print. Tenants will have policies different from standard ones as things like shared entrances need to be taken into account. Landlords should have buildings insurance, but it’s also wise for them to consider contents cover, too.

Some contents policies have exclusions and limits, and won’t pay out if you lose an item a certain distance from your property, if possessions have been wilfully damaged (or damage was caused by poor DIY, for example) or the item in question is very expensive and not covered by your contents policy.

Please note for these insurance products terms and conditions apply. This information is a summary only. You will receive a full policy document upon application. This policy will set out the terms, conditions and limitations of cover provided under the plan.

Those are the basics, but it’s always worth considering a contents policy with an experienced specialist to get key advice on what you need and keep to your budget. Contact the Oportfolio team today to find out more.

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