Everyone with a mortgage is obliged to take out a suitable buildings insurance policy to provide financial recompense in the event of damage or loss to the property that is being financed. However, home contents insurance is not compulsory and many people may consider the expense to be a luxury that they can do without.
Home contents insurance provides financial recompense in the event that any covered item is damaged, stolen or destroyed. Whilst there are limitations to the cover, it can provide a safeguard against the loss of property and allow the policyholder to replace damaged or lost items. The type and extent of cover can be chosen by the policyholder but the most comprehensive policies include new for old replacement of goods and cover for accidental breakages.
That means peace of mind where there are expensive items in a home that could be damaged or stolen such as computers, TVs, cameras or clothing and carpets. Some sites even have a calculator capability that allows you to add up the value of your possessions room by room. Do not be surprised if the value comes to more than £30,000 – it takes no time at all for the average family to accumulate goods and possessions of that value in a standard home!
The contents insurance business is competitive with lots of players providing differing levels of cover. Therefore it is important to get lots of quotes and compare the small print to see what is covered and, more importantly, what items or events are excluded from cover. Most policies, for example, will include items stored in garden sheds or garages and even have an option to cover items taken out of the home.
One way to reduce the premium is to increase the level of excess. Excess is the amount of any claim that the policyholder will pay before the insurance company has to reimburse. The higher the excess accepted, the lower the premium payable and vice versa.
As well as increasing the excess amount it is possible to get a better deal for home contents insurance if the cover is bundled with the buildings insurance. Whilst separate quotes should always be obtained it may well be that a combined cover policy will be cheaper than separate ones.
Just because you have home contents insurance you are not at liberty to claim on a whim. The claims procedures and departments of insurance companies are now well aware of the growing trend in fraudulent claims and employ sophisticated call analysis techniques to sift out genuine claims. Any claim may also be liable to be assessed by an approved insurance assessor through a personal visit.
Regular claims will also lead to higher future insurance premiums. All insurance companies now share their claims experience so serial claimants will either be denied cover or attract a loaded premium. Any false declarations during the application process may also lead to the policy being declared null and void with no rebate of premium.
Honesty and openness through the application process may lead to a slightly higher premium but at least the contents cover will be in place and valid for any claim made in the future. It can be a false economy to have too little cover or to mislead the insurance company when getting cover.
Contents insurance is a peace of mind product. No one likes to claim but should the worst happen at least there is a financial backstop to make getting back to the status quo a less painful experience.