Compare Basic Contents Insurance

What is Basic Contents Insurance?

Basic contents insurance is a type of policy that covers the financial cost of replacing your belongings in case they get damaged, lost, or stolen.

From electronics to simple kitchen items, this policy has your possessions covered. Basic contents insurance isn’t just for homeowners — renters who want to protect their belongings can also benefit from this kind of insurance.

What Items are covered by basic contents insurance?

Basic contents insurance provides coverage for a wide range of household items. Typically, these include:

• Furniture: Beds, sofas, dining tables, chairs, and bookcases.
• Electronics: TVs, computers, gaming consoles, and home audio equipment.
• Personal items: Clothing, shoes, and accessories.
• Kitchen items: Kitchen appliances, cookware, and utensils.
• Other household items: Books, bedding, tools, and sporting goods.

When can I make a claim?

You can usually claim on your basic contents insurance policy under the following circumstances:

• Theft: If your covered belongings are stolen from your home, you can make a claim to replace them.
• Damage: If your items are damaged due to events like fire, flood, or other disasters, you can make a claim. Remember, not all types of damage may be covered, so checking your policy is essential.
• Loss: You can also make a claim if your belongings are lost due to certain covered events.

Each insurance policy has specific terms and conditions about when you can make a claim, so always review these carefully.

Accidental Damage and Basic Contents Insurance

Accidental damage refers to unintentional one-off incidents that harm your possessions — like spilling coffee on your laptop or accidentally dropping your TV while moving furniture. These may seem like scenarios that any insurance should cover, but it’s not always the case with basic policies.

Basic contents insurance typically covers a specified list of events like fire, theft, or storm damage but usually doesn’t include accidental damage.

That’s usually a feature of more comprehensive policies or added as optional extra coverage, which means it comes at an additional cost.

Replacement value vs indemnity value

‘Replacement value’ and ‘indemnity value’ are terms you’ll come across in basic contents insurance. Here’s what they mean:

Replacement value

This is where your insurer will cover the cost of a brand-new replacement if your item gets lost or damaged. Let’s take your three-year-old fridge as an example.

If it was damaged beyond repair due to an insured event, your insurer would pay enough for you to buy a brand-new fridge of the same or a similar model.

Indemnity value

Under this cover, your insurer considers the wear and tear of your belongings. So, if that same three-year-old fridge were damaged, your insurer would pay out what it is worth today, considering its age and depreciation over three years.

The payout might not be enough to buy a new fridge, but it would be a fair representation of what the old fridge was worth.

What is Sum Insured?

The term “sum insured” in the context of insurance refers to the maximum amount an insurer will pay out for a claim, or series of claims, during the insurance policy term. It represents the total amount for which your contents are insured.

When your sum insured is based on replacement value, it should be high enough to cover the cost of completely replacing all your insured belongings with brand-new items, should a total loss occur. So, if you have a replacement value policy, your sum insured is likely to be higher, reflecting the higher potential payout.

If you’ve chosen indemnity value, sum insured takes into account the age, wear and tear of an item, providing a payout amount equivalent to its current value.

In this case, it will usually be lower than the replacement value, as it accounts for the decreased value of used items.

Figuring out the correct sum insured for your belongings is essential. If it’s set too low (underinsurance), you may not receive enough to replace your items in case of a claim. On the other hand, if the sum insured is set too high, you might pay a higher premium than necessary.

Don’t forget to review and update your sum insured value after new purchases, or significant changes in market prices. Some policies may offer ‘indexation’, which means your sum insured is adjusted each year in line with inflation.

How to determine your total insurance amount

To figure out how much your items should be insured for, you should estimate their replacement value. This value is how much it would cost you to replace an item at today’s prices. Here’s a step-by-step process:

1. Make an inventory: List all the items you’d want to be covered by your insurance. Remember smaller items, as they can add up quickly.
2. Find current prices: Look up the cost of replacing each item on your list. You can use online stores or recent receipts if you have them.
3. Keep track of high-value items: Items like jewellery, artwork, or high-end electronics might have a higher replacement value. Document these separately, as they usually need to be insured under a comprehensive policy or specified in your current one.
4. Add it all up: Add up all the costs once you’ve priced everything. This is the minimum amount of coverage you’ll want on your policy.
5. Revisit regularly: The value of items can change, and you might acquire new things. Make it a habit to update your inventory and the replacement value estimates regularly.

Most insurance providers offer online calculators to help with this process. These tools can provide an estimated coverage amount based on your input about the types and quantities of items you own.

Using these calculators as a guide is good, but remember that they are just estimates. Always verify your calculations to make sure you have enough coverage.

Basic vs comprehensive contents insurance

While basic contents insurance covers a wide range of everyday household items, comprehensive contents insurance goes further. It offers additional protection for high-value items like antiques or expensive electronics and covers more situations, including accidental damage.

Is basic contents insurance right for me?

Basic contents insurance could be a great fit if you don’t own many high-value items and are looking for a simple, affordable solution to protect your belongings. It provides sufficient coverage for most common scenarios without a comprehensive plan’s bells and whistles (and costs).

However, basic contents insurance is a starting point. Consider more extensive coverage for pricier items or additional scenarios depending on your needs.