What’s covered on a contents insurance policy?
Contents insurance covers your household possessions against loss, damage or theft. Items covered by a typical contents policy include electrical goods (hi-fi, TV, DVD player etc), your CD and DVD collection, plus furniture, carpets, clothes, ornaments and paintings.
Typically, there are two types of standard contents insurance. The cheapest is an 'indemnity' policy, which takes into account an amount for wear and tear. For example, if your six-year-old rug is ruined by leaking water, the payout reflects the age of the carpet. Generally more costly, though some bargain deals can be found, is a 'new for old' policy, which means that you’d be paid the full amount for a new replacement rug.
Some insurers offer accidental damage cover as standard, but in most cases you will have to pay extra for this. Extra cover can also be bought for valuable jewellery, antiques, artwork, transportable items, and even the contents of your freezer should a power cut cause it to defrost. See Additional/Extended Cover/Accidental Damage.
Is contents insurance compulsory?
Unlike buildings insurance, contents insurance is optional as your home’s contents belong to you. Nobody, other than yourself, is at risk of loss should a burglar take a fancy to your stuff, or should a cigarette send your belongings up in smoke.
However, if you place value in your belongings, for peace of mind you should consider insuring against loss, damage or theft.