Insurance Saving Part 2

Insurance prices depend on the level of cover you request, the risk involved and on the insurance company itself – its strategy and resources.

Contents insurance covers anything that you would take with you when you move house. When you value your belongings, you normally define a specific "sum insured". This is the maximum that the insurer will pay out. If it is calculated too high, it would mean too large a premium for your needs. But under insuring is worse: there could be a chance that your claim will be over the amount specified and will not be met by the insurer.

To work out what the correct amount, a common sense method is go from room to room and to note down what everything would cost, including all the fittings. It is soon clear how things mount up, even in a small property.

Bear in mind that not all policies are the same – not all work on the "sum insured" idea. There are simpler options available. For example:

• A "bedroom rated" policy may be convenient if you have more valuable items that could easily be under insured. It allocates a "sum insured" automatically. The amount depends on your location and the number of bedrooms in your home.
• "Unlimited sum! policies are quite rare, but there are a few providers that offer these as a standard part of the policy. It will cover all your possessions in your home, irrespective of the value. Should you have higher than average value contents that are worth over around £50,000, this could be great value because the premium is based on the average £35,000 sum insured contents value.

Should you own unusual items, such as antiques and very expensive paintings, you should have them valued separately.

Having chosen the level of cover you need, also make sure that you compare prices such as:

• New for old: where the payout should be for the original price of the item that you are claiming for (for clothing there is a deduction for wear and tear).
• Indemnity cover: the broker will only pay out the current value of your possessions.
• Add-on cover: this includes any property taken out of your home, such as wallets, jewellery and some musical instruments.