What level of contents insurance do I need?

Contents insurance covers the cost of replacing your belongings in case of damage, destruction or theft. Your belongings are the things inside your home that you’d take with you if you moved: so clothes, jewellery, furniture, electricals and so on.

Now, that’s a lot of stuff, so working out the right policy can be complicated - but if you’re going to pay for insurance, you want to get it right. Here are a few things to consider.

Premium insurance vs payout insurance

Premium vs payout

It’s tempting to underestimate the amount of cover you need, in order to reduce your insurance premiums. However, it’s crucial to think about what it would cost to replace everything, as your insurer will work out any claims on that basis – even if you’re only claiming for a single item.

That means if you underestimate the value of your belongings by half, and then make a claim, you could also be underpaid by half, whatever you’re claiming for.


Policy options

Different policies also use different methods to calculate the amount of cover you need. There are three ways of doing it: ’bedroom rated’, ‘sum insured’ and ‘unlimited sum insured’. Here’s how they differ.

Bedroom-rated insurance - Home insurance - British Gas

With this type of policy, the insurer decides how much cover you need based on the number of bedrooms in your home. It averages out somewhere between £40,000 and £50,000 worth of protection, which is enough for most households. Choosing this type of policy means you don’t have to do any calculations yourself. However, it’s based on average value, so you should think about whether it’s definitely enough to cover all of your belongings, especially high-value items.

Sum-insured - Home insurance - British Gas

This type of policy is based on your individual circumstances, so it’s your responsibility to calculate the value of your belongings. This can be a daunting task but in theory, it means you’re less likely to be under or over-insured.

Unlimited sum-insured - Home insurance - British Gas
Unlimited sum-insured

As the name implies, this type of policy means all of your belongings are covered, for an unlimited amount. It’s the most comprehensive option but also, unsurprisingly, the most expensive.

Doing it yourself

If you choose a sum-insured policy, you’ll have to estimate the value of your belongings.

Unfortunately, there are no real quick fixes. First, list all of the items in your home. Some insurers offer checklists to help, but you can just walk around your home, one room at a time, and note down what you see.

Then, once you’ve got your list, work out what each item would cost to replace. Add up your figures, and that’s the amount of cover you need.

High-value items and valuables - Home insurance - British Gas

High-value items and valuables

If there are particularly high-value items on your list, it’s worth checking that they’ll be covered by a standard policy. Most insurers have a limit on the amount they’ll pay out for a single item, so you may need separate protection. 


Things to be aware of

Other common exclusions include the following.

Accidental damage - Home insurance - British Gas
Accidental damage

Some policies have a degree of accidental damage cover, but it’s rarely comprehensive. If you’ve got young children, it might be worth adding additional cover.

Personal possessions - Home insurance - British Gas
Personal possessions

Things like personal devices and handbags – things you take outside of the home – usually have to be covered separately under a ‘personal possessions’ add-on.

Pairs and sets - Home insurance - British Gas
Pairs and sets

If you have pairs or sets of furniture, you’ll probably only be covered for the cost of replacing individual elements, not the whole suite.

Business equipment - Home insurance - British Gas
Business equipment

If you work from home, it’s worth checking exactly what you’re coved for - some policies include cover for work phones and laptops, but many don’t. Specialist equipment is also unlikely to be covered.

Home emergencies - Home insurance - British Gas
Home emergencies

While your appliances should be covered by either your contents or your buildings insurance, the cost of a call-out in the case of a breakdown may not be. Add on home emergency cover, or stand-alone boiler cover, to protect yourself against the cost of domestic disasters.

Types of cover - Home insurance - British Gas

Types of cover

And finally, there are two types of contents cover: ‘new-for-old’ and ‘indemnity’. The type you choose will also affect your premiums, and any potential pay-outs.

New-for-old - Home insurance - British Gas

This type of cover means that, if you make a claim, your insurer will cover the cost of a brand new product, of the same value as the original.

Indemnity - Home insurance - British Gas

With indemnity cover, you’ll get the value of the item you are claiming for, at the time. That means the age of the item, and subsequent wear and tear, will be taken into account. This type of policy tends to be cheaper, but that’s because the pay-outs are lower.

Terms and Conditions apply. Home Insurance is arranged and administered by British Gas and is underwritten by a carefully selected insurer. Your policy documents will show who your insurer is. British Gas is a trading name of British Gas Services Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales (Registered No.03141243). Registered office: Millstream, Maidenhead Road, Windsor, Berkshire SL4 5GD.

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