What is contents insurance?

Have you ever wondered how you’d cope if you lost your valuables to fire, theft or damage from flooding? That’s what contents insurance is for – to provide financial protection if those things happen.

It covers all your personal belongings – anything not physically attached to the building – against the cost of loss or damage.

The other type is buildings insurance (which protects the structure of your house and its permanent fixtures). You can buy both types of insurance separately, or you can buy them as a joint home insurance policy.

Contents insurance is optional, whereas if you have a mortgage there is a requirement to have buildings insurance. But insuring your possessions is generally a sensible idea, whether you’re a tenant or the owner.

If you’re a tenant and want your possessions to be insured, it’s up to you to take out contents insurance, not the owner.

Policies can vary in terms of what exactly they cover, but they usually include:

•  clothing
•  furniture
•  jewellery
•  electrical goods.

You’ll usually be covered against theft, fire and flood, but cover for accidental damage tends to be an optional extra.

‘Personal possessions cover’ can also be added for extra cost. This is sometimes referred to as an ‘all-risks extension’ and it will cover items you take outside your home, including:

• laptops
• cameras
• jewellery
• handbags
• mobile phones/tablets.

Some insurance policies will also cover you for when you go abroad, so if you lose or damage your possessions while you’re away, you’ll be able to claim for them on your contents insurance. This is usually another optional extra that you add in return for a higher premium.

There are three main types of policies available:

•  ‘Bedroom rated’ – the insurer works out the amount of contents cover you need (the ‘sum insured’) based on the number of bedrooms you have. These policies typically provide between £40,000 and £50,000 of cover as standard. This is usually enough for most houses, but make sure it’s enough to cover your possessions.
• ‘Sum insured’ – you (not the insurer) have to calculate the amount of cover that you need.
• ‘Unlimited sum insured’ – all your contents are covered without limit, so you don’t have to worry about being under-insured.

If you have a ‘sum insured’ policy and need to calculate the amount of cover you need, you have two main options.

One is to search online for a contents calculator, which most comparison sites offer. Or, you can list everything that you own and add up what it would cost to replace every item at today’s prices.

Be aware that if you use a comparison site to shop around you might not be offered a choice – the site will ask you how much contents cover you want and will pick policies that offer this.

While landlords are responsible for the building and permanent fixtures and fittings, they're not responsible if anything happens to your possessions, such as in a fire or burglary.

So whether you’re renting a whole property from a landlord or just a single room, you probably  need contents insurance if you want to protect your personal possessions. Your landlord might have contents insurance too, but it’s likely it will only cover the items they own (such as carpets or furniture).

If you’re a lodger (renting a room with a live-in landlord) or sharing with non-family members, insurance might be more expensive due to the higher likelihood of people going in and out of the property.

If you share a home you might be able to persuade the people you live with to get a joint contents insurance policy for the whole property.

• Comparison websites – these are a good way to find cheap insurance that fits your needs. But remember that the cheapest policy isn’t necessarily the best for you, so it's important to not simply pick the first one you see. See or guide on using comparison sites to buy insurance.
• Direct from insurers - not all insurers are covered by comparison sites. Aviva, Zurich and Direct Line are among the big names that don’t appear – and their products can only be bought directly.
• Insurance brokers – they can help you get the most suitable home insurance for your circumstances, particularly if you have complicated needs. See our guide on when to use an insurance broker. 

Make sure you answer truthfully and accurately when applying for insurance and answering your insurer’s questions. If you miss something important, a future claim could be rejected. For example, many standard policies don't insure people who have a lodger – so if you take in a lodger without letting your insurer know you could invalidate your policy.

It’s common for insurers to add a range of exclusions to their policies, so make sure you read the small print carefully – including the key features and benefits information (especially if you’re now working from home). If you see something you don’t understand, ask your insurer or an insurance broker.

This ensures that you have enough cover, particularly if you've bought new items that are worth more than the single item limit on your policy. The same applies if you’ve made a series of major purchases (such as furniture) which means you need to increase the sum insured. Let your provider know if you think you need more cover. 

The cheapest deal is not necessarily the best. Make sure you get the right policy, even if it costs a few pounds more – if you don’t have enough cover to replace all your possessions your insurer might not pay out on the amount that you claim for. 

It’s a competitive market with a lot of different policies available. Using comparison websites to shop around will give you a better chance of securing a good deal. It’s worth doing this when your policy comes up for renewal each year, as simply allowing your insurer to automatically renew your policy could mean you end up paying more than you need to.

You can ask your insurer to cancel your policy at any time, but there are a couple of things to be aware of: 

• you won’t earn the current year’s no-claims bonus if you cancel midway through

• you’ll usually have to pay a cancellation charge, unless you’re at renewal. 

If you’ve paid upfront and haven’t made a claim, you’ll receive a refund for the remaining months – minus any cancellation fees.