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:
- “Insured perils” vs “All risks” – This determines how extensive risk exposures are covered under the plan.
- “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.
- 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.
- Deciding sum insured for your home contents – The general rule of thumb is the replacement cost of your content should it be completely destroyed.
- Common exclusions – They may differ among insurers and hence it is prudent to take a closer look when doing comparisons.