Home insurance mostly comes in three packages: building cover, contents cover and building and contents cover. As the names suggest, building cover protects fixtures and fittings, whereas you require contents insurance to cover your belongings usually kept inside your house. While building and contents cover only really applies to those who hold the freehold to their home, i.e. those who are not renting their property, building cover is mostly designed for landlords, yet contents cover is worth everyone’s while and worthy of consideration by everyone. In general, most people tend to undervalue their belongings and estimate their worth to around £25,000. However, figures show that the true value of an average household’s combined belongings is actually upwards of £50,000.
As part of your home insurance, contents cover comes in two categories: new-for-old cover and indemnity cover. In the event of a successful claim, new-for-old cover insures you a new replacement for an old item, without taking wear and tear into account. If you make a claim for an old sofa, for whatever reason, you will be given a new sofa in its place. Indemnity cover insures you for the item, but factors in wear and tear and will not offer you a new item in place of an old one. Of course, this will be reflected in the price of your insurance, which will be more for new-for-old cover.
The most important aspect of contents cover, whichever type you choose to go with, is that you develop an accurate inventory of items that come under this category of cover, with a copy of proof of purchase and/or ownership in the case of making a claim. Items include but may not be limited to electrical items such as laptops, televisions and computers, furniture, jewellery, money and clothes. Basically, anything that you would take with you when moving house.
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