Insurance Limits & Exclusions

Almost all contents insurance policies also put a limit on the overall amount that you can claim, usually referred to as the sum assured. This amount will vary insurance company to another. Some insurers are fairly inflexible in that they have a range of standard policies with a set sum assured and do not offer many options to customise the policy any further.

A large percentage of people severely under-insure their home contents, often by as much as 50 or even 100 percent. This problem is particularly acute with high value properties, where many high value items are not included on policies individually, as they usually should be.

To decide what your minimum sum assured should be, make an inventory checklist of absolutely everything you can think of that you have in and around your home. Then calculate how much it would cost to replace each of the items. This should include things that you have made or built, been given or bought, as they would all need to be replaced if they were stolen or damaged.

You should also try to include an approximate date on which the item was purchased and gather together any receipts you may have. Making this list is an incredibly tedious thing to do, as you will have to slowly go through every room in the house, listing every item and then attributing a replacement value to it. It is worth taking the time to do this properly though, as you will probably be surprised at how high the eventual total is.

Some insurers also put a limit on the amount you can claim for individual items. You should look out for this in policy details, where it will usually be called the Single Item Limit. It may be a lower value than some of your possessions. Where this is the case, you have three options:

• Negotiate for the full value to be included in the policy.
  
• Insure the item entirely separately.
  
• Break the item down into component parts of lower value. Cameras can have the lenses, main body and peripheral equipment insured separately, for instance.
  

There are a few things that your policy may or may not include cover for:

• Accidental damage
  
• Away from home cover (possessions, cash and credit cards whilst you are away from your home)
  
• Cover for frozen food
  
• Make sure your buildings insurance policy starts from the day that you sign the contract, not from when you move in. If you do not have buildings insurance and the house is struck by lightning in between the time you exchange contracts and move in, it will be you who is liable.

You should review your buildings and contents insurance fairly frequently, and make sure that it is kept up to date with any major purchases or alterations to your home. If you fail to inform your insurance company of any building work you have done or expensive valuables that you buy after you take out the initial policy, you may struggle to recoup any money when you come to make a claim.