Do I Need Contents Insurance?
Contents insurance: a must-have for tenants or an unnecessary expense? Get all the facts so you can make an informed decision.
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When you rent, it's important to be aware of what your landlord is responsible for and what you will need to arrange yourself. While almost all landlords will have some kind of insurance in place, it's down to you to protect your possessions. That's where contents insurance comes in. But what exactly does contents insurance cover? And do you really need it? In this post, you'll discover everything you need to know so you can make an informed decision.
What Does Contents Insurance Cover?
Every insurance policy will be slightly different depending on the provider. However, generally speaking, you can expect contents insurance to cover your possessions against theft and damage caused by fire, flooding, storms, burst pipes, water leaks and subsidence (when the ground beneath the property moves).
With insurance, you can expect the insurer to reimburse you or replace your possessions (depending on the policy) if they are damaged or lost. There are also various add-ons you can get to cover you in different circumstances, which we'll take a closer look at below.
What About Building Insurance?
Most mortgages require the property owner to take out buildings insurance. This kind of insurance is designed to protect the building itself (plus the land it is built on) as opposed to the items inside it. It covers things like structural damage, fixtures and fittings.
As the owner, getting building insurance is always your landlord's responsibility. Unlike contents insurance, it doesn't offer you any protection for your personal belongings. Even if a landlord has taken out contents insurance, this will only cover any items they have provided such as furniture or appliances.
What's Not Covered By Contents Insurance?
When looking at different policies, you should always read the fine print. That way, you know exactly what is and isn't covered. For the most part, you'll find that the following are either not included in the policy at all or only available as a paid extra.
Wear And Tear
Though contents insurance is designed to cover damage, this does not extend to damage caused by general use. For example, if your sofa broke after 7 years, your policy would not cover it.
Items Outside Of The Home
Most contents insurance policies will only cover items while they are inside the home, even items like mobile phones and bicycles which are designed to be taken with you.If you would like additional cover, you can usually get an all risks‚ or personal possessions‚ add-on. This will extend the policy to cover items outside the home, even if you take them away on holiday. Even then, there are normally significant limits on these types of add-ons, so make sure the coverage is sufficient for your items.
If you damage your items unintentionally, most policies will cover this up to a certain extent (typically only for damage to electronic goods like TVs or computers). However, accidents like unintentionally spilling paint on your sofa are usually not included. Many insurers offer full accidental damage cover as an add-on.
Theft In The Event Of Unforced Entry
While contents insurance is designed to cover theft, if there are no signs of forced entry then your claim will likely be rejected. This is because, in the insurer's eyes, you haven't taken appropriate measures to secure the property if a thief could simply walk in. As a result, this invalidates your policy.You may think that this could never happen to you, but it's more common than you'd imagine. Recent statistics show that 1 in 7 burglars enter the property through an unlocked door. Along with being vigilant in locking your doors and windows, you can help avoid this by not hiding any spare keys outside.
If you work from home, any items related to your business (like a work laptop, for example) may not be covered by standard contents insurance. Instead, you will need specific business contents insurance. If you are running your own business from home, you must make sure to let your insurer know. Not doing so could invalidate your policy.
Contents Insurance For High-Value Items
If you have any particularly expensive items, they may not be automatically covered by standard contents insurance. Most policies consider anything over £1,500 to be high value, but certain items like bicycles, mobile phones and tablets may also fall under this category (even if they were less expensive). Whenever you take out contents insurance, you will be asked to estimate how much it would cost you to replace all your belongings. But with high-value items, most policies will require that you list them separately for your cover to be valid.
You must also report any high-value items purchased after you have taken out the policy. They may not automatically be covered, so it's best to do so as soon as you have made the purchase.
Documenting Your Purchases
With expensive items, it's really important that you keep hold of some kind of proof of purchase. Ideally, this should be the receipt, but in most cases, a bank statement, valuation certificate or even a photo will do. Without documentation, no insurance company is likely to agree to your claim.
Contents Insurance For Shared Housing
Many insurers aren't prepared to cover shared housing, particularly when the bedrooms doors don't have locks. You will still be able to find a contents insurance policy. Just be aware that you will have a more limited choice of providers and may find that they exclude more items. In most cases, the policy will cover you for damage and theft of items in your room only. If you leave them in other rooms in the house, you usually won't be able to claim. Because of the perceived risks of sharing a home with other people, you can also face higher premiums.
What About Halls Of Residence?
If you are moving to university accommodation then it's worth checking your university's own insurance cover. Many already have policies in place to protect your possessions. This means you may not need to get contents insurance of your own. If your university doesn't offer cover, or the cover is not adequate, then it's worth the extra effort to find a suitable policy. Research from the Office for National Statistics shows that young people aged 16-24 are more likely to be victims of burglary than older age groups.
What To Look For In A Contents Insurance Policy
There are lots of choices out there when it comes to choosing an insurance provider. This can make it hard to know which one is best. If you think contents insurance may be a good choice for you, here are some things to look out for.
All insurance policies will come with a compulsory and voluntary excess. This is the amount you will pay if you make a claim. Typically, a compulsory excess will be £50. So if you make a claim for a £200 tablet, you will contribute £50 and get £150 from your insurer. As the name suggests, the voluntary excess is what you voluntarily offer to pay on top of the compulsory excess.
Make sure that the compulsory excess is reasonable for your financial circumstances. The voluntary excess of course, is completely up to you. A larger excess will reduce the cost of your premium. This has the disadvantage that in the event you need to claim, you will get less money back. This can be a disadvantage if you need to claim as you will get lees money back.
You will usually find two types of contents insurance: new-for-old and indemnity. With indemnity cover, your insurer will not replace your item. Instead will give you money equal to the value of the items at the time you lost them. The draw of an indemnity policy is that it tends to have cheaper premiums. Bear in mind this also means you will get a smaller payout in the event of a claim. But new-for-old is always the preferable option. This type of policy allows you to get a brand new item (or receive the monetary equivalent)
The price of your premium will depend on a variety of things, including the total value of your belongings. Research has shown that the average annual cost of a contents policy insurance is £125 (though for basic cover this can be as low as £56.75).
Because everyone's circumstances are different, there is no ideal price for contents insurance. But by looking at average figures and comparing a few different policies, you can make sure you are paying a fair price for the cover you will receive.
The average household in the UK has £35,000 worth of belongings inside. With contents insurance available at just a fraction of the cost, you can see why many tenants opt for cover. In many cases it is a wise financial decision. It can offer you extra peace of mind should the unexpected happen.However, there is no legal obligation for tenants to have contents insurance (and only 53% of renters do).
It is ultimately a personal choice and will depend on your individual circumstances, your risk level and the value of your belongings. If you would like some personalised advice, Oasis Living will be happy to help you decide if contents insurance is for you. Get in touch today and we'll get back to you as soon as we can.
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