It is only when you sit down and carefully itemise all of your personal possessions in your home that it begins to sink just how much of an investment they represent – or quite what a sum it would cost if you had to replace them all. It is surprising, therefore, how many people overlook the importance of home contents insurance and that amongst those who have taken the precaution of purchasing some form of cover remain nevertheless inadequately insured.



So what are the risks that the contents of your home are exposed to? There are probably rather more than you thought, ranging from theft and vandalism to damage by water from burst pipes or flooding, and of course fire. Depending on the type of home contents insurance you buy, accidentally inflicted damage might also be covered.

Home contents insurance is designed to cover all your possessions within your home, whether you are a tenant or owner-occupier. Most policies will also cover those items which you often take with you away from home, such as sports gear and cameras. Some of the more flexible policies will also automatically increase the amount covered over Christmas time, because that is when you will have additional items in the house to give as presents. For similar reasons, some policies also recognise the additional items likely to have been accumulated by couples who have just got married.

The basic choice when selecting home contents insurance is between cover on a "wear and tear" or "new for old" basis. The former is slightly cheaper because it provides an insurance valuation that deducts a percentage from the original purchase based on the number of years owned. The latter, which is also described as "replacement as new" will do precisely that – it will provide compensation with which to replace lost or damaged old items with new ones at their current price. Items generally excluded from such "new for old" are clothes and household linens.

It is very important to take the time and trouble of itemising and carefully valuing all of your household possessions, listing not only what you paid for them, but also their cost if you had to replace them at today's prices. The total is the amount you will want to insure – the so-called "insured sum". Not only does this set the maximum that the insurance company will pay out in the event of a claim, but also determines how much you will need to pay in premiums.

Beware any temptation of under-valuing your home contents in order to reduce the premiums however. In the event of a claim, the insurer will always refer to the total sum insured and even if your claim is for only one or two items, the maximum paid will be a proportion of the total sum insured – so you will be inadequately covered. By the same token, this makes it equally important to review and update the insurance value of your home contents on a regular basis.

Home contents insurance, therefore, offers indispensable protection of all your household and personal possessions, whether you are a tenant or owner-occupier. Although the insurance is relatively simple and straight forward, a reputable insurance broker will be only too pleased to offer the advice and guidance you need for buying the cover that suits you.