What should I consider when choosing a Home Contents Insurance plan?

Price is commonly used as a basis among buyers when selecting a home contents insurance plan. With increasing competition among insurers, buyers are spoilt for choice in the marketplace. The focus should fall upon the following key factors besides price:

 

  1. “Insured perils” vs “All risks” – This determines how extensive risk exposures are covered under the plan.
  2. “First loss” vs “Full sum insured” – This determines the value of the financial losses or damages claimable against the plan. Claims settled on a First Loss basis are without penalty for being under-insured. Under the “Average Clause”, the insurers can reduce payment on a claim by the percentage you are under-insured.
  3. Valuables – Home Contents Insurance normally has a sub-limit for unspecified items. For full-cover, valuables must be itemised for insurer’s review and additional premium. Examples of valuables are watches, paintings, works of art, jewellery, antiques, precious stones and other collectable items.
  4. Deciding sum insured for your home contents – The general rule of thumb is the replacement cost of your content should it be completely destroyed.
  5. Common exclusions – They may differ among insurers and hence it is prudent to take a closer look when doing comparisons.