If you believe what you see in the adverts, insuring your beloved possessions should be a straight forward process that any of us could follow – and getting caught out by the small print should be a thing of the past.
But not all insurers and not all home contents policies are created equal. Some small differences in the terms and conditions could cost you dearly if something goes wrong.
Worry not. This article will help you learn the Top 5 things to consider when taking out or renewing your home contents policy.
Big ticket item exclusions
As part of taking out a home contents insurance policy, you will be asked to estimate the total value of the contents. At this point you might have assumed that any of your belongings will be covered up to this limit, and will be replaced if damaged or stolen. However, most insurers impose a ‘single item maximum’ on their contents policies. This means that you might not be able to claim for the full value of these expensive items, even if the total amount you are claiming is less than the total sum you have insured.
To take an example, lets imagine you have bought a shiny new 4K TV for the living room, at a cost of £3,500. If you have a contents policy with a single item limit of £2,000 – you couldn’t claim more than £2,000 for this item if something went wrong, even if the total claim is less than your total sum insured.
Most insurers allow to specifically list items that you own that would be above their single item limit, however this will increase to the cost of the cover. You should also check that any new items you purchase during the year are covered.
Omitting these items can even make the whole policy invalid in some cases.
The important thing here is to be aware of these limits, carefully check for exclusions, and shop around to get the best price.
Maximum limit on ‘Valuables’
In a slight variation of the above exception, many insurers also impose a maximum limit on ‘total valuables’. This can vary quite a bit by total sum (e.g. £5,000 – £25,000), or also be specified as a certain percentage of the total sum insured, usually about 30%.
Most people here tend to be caught out by the differing insurers definition of ‘valuables’. There are the obvious things, such as jewellery, watches, precious metals, art collections, etc… However, depending on the policy, items such as tech gadgets, designer goods, musical instruments, professional tools/instruments, may all be included in this definition.
Again, if the total of these items exceeds the maximum valuables limit of the policy, then you may not be covered for the total value of these items in the event of a claim.
Are you Under-Insured?
To many people with a home contents policy it would never occur that a valid claim for less than the total value they have insured could be reduced by the insurer applying something called an ‘average cause’. This means that instead of paying out the full value of your claim, they pay out a partial amount – usually worked out as the ratio of your current sum insured to the insurers’ valuation of your actual contents.
For example, imagine you insure contents for £15,000 when the actual value of the contents is £30,000. A break-in results in a theft of £5,000 worth of valuables. However, for the insurer, the payout is worked out as:
Unfortunately, whilst you have had £5,000 worth of your property stolen, the insurer will only pay out £2,500 (less any policy excess). This is despite you taking out insurance to cover £15,000-worth of valuables.
There is also scope here, under some Ts&Cs, for the insurer to consider the policy void in its entirety – from their point of view you would have ‘failed to disclose’ the true value of your contents.
Again, make sure you check the terms and conditions of your policy thoroughly when taking it out, and ask for recommendations. If you need to claim, being knowledgeable about your policy wording will help to pre-empt any claim disputes.
Is your home properly maintained?
There are many cases when insurance claims are rejected because of easily avoided home maintenance issues. This is further complicated by the fact that may people buying home contents insurance are renters, and therefore are not ultimately responsible for the upkeep of the building.
Even renters, however, still need to be aware that many home contents policies will not pay out for damage that results from neglect or poor home maintenance, no matter whose responsibility the building is. Fires resulting from faulty wiring, water damage resulting from a neglected leaking shower or roof damage, theft resulting from poorly fitted replacement locks after a key change… All of these could be reason for the insurer to deem the claim for contents invalid.
Ensuring that these household maintenance jobs are not overlooked by either the tenant or landlord should give peace of mind that their claims should be valid and available to them when they most need them. As a renter, this can even be a good encouragement to persuade your landlord to fix things quickly.
Are your personal items covered away from home?
Most insurers will either provide as standard, or allow you to add on to a contents policy, cover for your personal possessions whilst they are away from your home. Typically this would cover things like wallets, jewellery, laptops, etc…
There are a few things about this type of cover to check in particular, to make sure that its suitable for your needs:-
- Does it cover you for accidental damage?
- Does it cover possessions that are left unattended? (such as in a changing room)
- Does it cover tools or personally owned business related equipment?
- Does the policy apply a limit to the number of days when cover is provided within that policy year?
- Does protection apply if you take the items abroad?
- Does is cover smartphones?
Depending on the insurer, there can also be a requirement to individually list certain items if you want them covered away from home, or they may not be covered at all. Prime examples in this category include bicycles and laptops, and here again they may apply a ‘single item limit’ to these objects when covered away from home.
Note that the general ‘single item limit’ and ‘maximum valuables’ limits discussed above would also apply to personal possessions claims.
Still worried about getting the right contents policy?
At Urban Jungle we are working on developing new policies which will help you avoid these pitfalls, without overpaying, or spending hours with your head buried in a policy document.
If you want to hear more from us when we launch, or tell us your worries about contents insurance, then please pre-register here