Home & Contents Insurance: How do I work out the value of the contents of my home?

From the linen covering your bed to the cushions plumped on the sofa, and from the family heirlooms hidden in the attic to your treasured digital appliances, everything in your home, big or small, is …

From the linen covering your bed to the cushions plumped on the sofa, and from the family heirlooms hidden in the attic to your treasured digital appliances, everything in your home, big or small, is worth something. And across the span of the hundreds, if not thousands, of items that make up the contents of your house, the amount that it all adds up to can be huge.

According to the Association of British Insurers, the average UK home has roughly £35,000 worth of contents inside. So, with the ever-persistent threats of house fires, flooding, or theft, all of which could see you lose a significant amount of your home’s content, every home must be covered by contents insurance. However, a recent survey found that over a quarter of homes in the UK are not covered by any type of home insurance.

Contents insurance is a type of home insurance that provides cover for the value of your home’s contents. The exact value of what it all adds up to is for you to calculate. But it can be difficult to work it out and if you estimate too high, you will pay too much insurance, and if you estimate too low you will be underinsured. So how do you accurately work out the value of the contents of your home?

In this article, we will look at how to work out the value of your home’s contents, what is and isn’t covered by contents insurance, and how you can save on your contents insurance.

What is home and contents insurance?

Home insurance is broadly divided into three categories: building insurance, contents insurance, and combined building and contents insurance. Building insurance is a legal requirement unless you own your home mortgage-free. It protects the physical building and covers anything that can’t be easily removed, such as doors and bathtubs. Contents insurance covers your possessions in your home. It is not a legal requirement to have contents insurance. Combined building and contents insurance brings the two branches of home insurance together and offers a cheaper option by combining them both into one policy.

Despite the average overall contents value of houses in the UK being higher than many would expect at £35,000, the average cost of home insurance is surprisingly low. As of 2020, building insurance is on average £111 per annum, while contents insurance stands at only £57. The average price of combined buildings and contents insurance is around £140, which means it’s considerably cheaper than having separate building and contents insurance.

So let’s jump in and take a look at how to work out the overall value of the contents of your home.

How do I work out the value of the contents of my home?

The key to knowing how to get the right value for your contents insurance is knowing what you should and shouldn’t insure and making reasonable and accurate estimates of the value of the items you want to insure.

If you insure too many items, or if you overestimate their costs, you will be well-covered if the time ever comes to make a claim, but you will also pay considerably more in insurance fees with no guarantee that these will ever be needed. Similarly, if you insure too few items or underestimate their costs, you may find that if you make a claim, the cover will not be enough to replace everything that needs replacing. According to the Association of British Insurers, the latter is a more likely scenario, as around one in five UK households are underinsured because they don’t know how much their contents are worth.

Contents insurance is best worked out on a room-by-room basis. In each room, note the items that you think are worth insuring. Are they irreplaceable or very expensive? Or, are they cheap and easily replaced? Or perhaps they are quite costly, but ultimately it may be cheaper to replace when the time comes rather than continually pay for insurance.

Once you have the items you wish to insure, write down how much each is worth or make an estimate if you don’t know. Some insurers may ask for proof of your valuation on particularly valuable items, such as jewellery. This can be done by a valuation specialist or through submitting receipts of purchase.

When you have done this in every room and calculated the total value, you can send off your figures and receive a quote.

What is covered by contents insurance?

Contents insurance will normally cover you against damage or loss caused by fire, flooding, or theft.

Most policies carry an excess. The excess will vary depending on the policy, but typically it may be between £50 and £100. There may also be a limit on how much can be claimed for one single item.

Many contents insurance policies will offer cover on a ‘new for old’ basis. This means that they will replace a damaged or lost item with a new equivalent. This ensures that you can actually replace the item and not just receive the money it would have cost when it was first purchased.

Contents insurance policies will often have a total valuables limit. This indicates the maximum amount you can claim on your contents at one time. The total valuables limit is usually a percentage of the total contents’ value. For example, if your total contents are worth £10,000 and your valuables limit is 50%, for each claim you make, you will only be entitled to £5,000.

Contents insurance can cover most items in a home that are deemed to be of value.

This includes, but is not limited to:

  • Floor coverings, such as carpets and rugs
  • Furniture, such as tables, chairs, sofas, beds and wardrobes
  • Soft furnishings, such as curtains and cushions
  • Electronics, such as TVs, laptops, stereos, phones and games consoles
  • Appliances, such as ovens, hobs, fridge freezers, washing machines and microwaves
  • Crockery and utensils, such as cutlery, china, glasses, silverware, pots and pans
  • Valuables, such as jewellery, art and ornaments
  • Sport and leisure equipment, such as golf clubs, bikes, computer games, books and toys
  • Garden and DIY items, such as garden furniture, mowers, ladders, hot tubs and tools
  • Linen, such as towels and bedding
  • Clothes and shoes.

What isn’t covered by contents insurance?

It is important to also be aware of what isn’t covered by your contents insurance policy as you will need to find other, more suitable insurance options for such items.

Again, all policies will differ, but most contents insurance will not provide cover for:

  • Vehicles. Any motor vehicle will need vehicle insurance. Some push bikes may be covered by contents insurance, however, it will likely depend on where the bikes are stored. Be sure to check the details of your policy if you want to have your push bikes covered.
  • Building damage. Any damage caused to the structure or exterior of the building will need to be covered by building insurance. Contents insurance is purely for items that can be removed from the house.
  • High-value items. As we saw before, most contents insurance policies will have a price limit on what is covered. Check your policy for the details, but any items that exceed the limit will need their own specialist insurance.
  • Home business equipment. If you work from home and have taken equipment from your employer’s office, be sure to check that the equipment is insured once it is out of the office.
  • Permanent features, such as sinks, baths, and doors. Features such as these should be covered by building insurance as they are non-removable items within the home.
  • Damage caused by natural wear and tear. Over time everything is liable to gradual damage. Any such damage caused to items will not be covered by a contents insurance policy.
  • Deliberate damage. If an item has been knowingly or deliberately damaged before a claim is made, it will not be covered by contents insurance. Making such a claim may also lead to criminal penalties for insurance fraud.
  • Damage caused by pets. Most contents insurance policies will not cover any damage caused by pets.
  • Unoccupancy. If your home has not been occupied for 30 consecutive days the contents will usually no longer be covered by contents insurance.

How can you save money on contents insurance?

Although contents insurance is usually fairly affordable, there are still methods you can employ that will ensure the costs of your insurance policy is kept to a minimum.

  • Don’t overestimate your contents’ value. Some people overestimate their contents’ value as they are worried they will not get enough back if they do make a claim. However, it is best to be as realistic as possible when estimating the value of your items as you will end up paying considerably more in insurance costs.
  • Increase your excess. Most insurance policies will have an excess. If you request to voluntarily raise your excess, you will see a reduction in the overall cost of your insurance. This means your policy will only cover you over a certain amount.
  • Install a security system.
  • Build up a good no-claims discount. The longer you go without making any claims, the lower the cost of your contents insurance will be. For example, if you live in an area where push bikes are frequently stolen and you make multiple claims after losing bikes, your insurance costs will either go up or no longer cover claims made for bikes. You may consider covering the cost of an individual bike, as it could save you money by improving your no-claims discount in the future.
  • Combine contents with building insurance. As we saw earlier, bringing building and contents insurance together in a combined policy almost always works out cheaper than having individual policies for each.

Summary

Some homeowners don’t have contents insurance and of the ones that do, many are underinsured. The overall value of the contents of the average home in the UK stands at a staggering £35,000. When you consider this alongside the fact that there are over 250,000 burglaries in England and Wales each year, it is astonishing that over a quarter of UK homes are not covered by any insurance.

Contents insurance is usually very affordable. So, with the value of the average home’s contents amounting to such a significant amount, it is crucial that homeowners purchase contents insurance and that they adequately estimate the value of their items when they do.