Personal Possessions Insurance Explained
Cover your belongings outside the home
Home contents insurance is enough to protect your belongings from thieves and damage while they’re in your house, but what happens when you step outside that front door with your possessions? That’s when personal belongings insurance comes into play.
For example: If policyholder Andy’s favourite collectible item ‘Woody’ was stolen or damaged by fire or water at home, standard home contents insurance would pay Andy an amount representative of the loss. However, because Andy often takes the item out of the house, it’s important he also has personal belongings insurance in place, should anything happen to it whilst out and about.
Personal possessions insurance is a crucial form of contents insurance that could help cover the cost of your belongings being stolen, lost or broken while out of the house.
Here, we explain what exactly this type of insurance can cover and how it could be of use to you, as well as what items some policies may not cover.
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Personal possessions insurance essentially covers your belongings against loss, theft or damage outside the house.
Items covered by each policy differs greatly with each provider, which often means you’ll be required to explicitly ask the insurer which type of belongings are covered and which are not.
You might even need to specifically request that certain items are insured at an added cost dependent on its value, as we’ll discuss in due course. Here’s a list of some general items that are usually covered by personal belongings insurance:
Wallets, purses and handbags
While it is often purchased as an add-on to home contents insurance, it’s also possible to get standalone personal possessions insurance.
Although the above shows a list of items usually included in personal possessions cover, there are some items that may not be automatically included within the policy and will need to be listed separately.
Highly valuable items
Items over £1,000 to £2,000 (depending on the provider) must usually be listed to insurers separately due to their high cost.
Although some bicycles can be covered without the need to list them separately, bikes over £500 (or so) may need to be listed.
Some providers also exclude bicycles from personal belongings insurance entirely, due to their risk of being stolen or damaged.
Your sports equipment may need to be listed separately when you take out personal possessions insurance due to their value.
If your equipment is damaged during its intended use, it’s unlikely you’ll receive a payout as the issue should be resolved between you and the manufacturer, rather than the insurer.
Good old fashioned cash is often protected up to a threshold of around £500, but that depends on your provider and the level of cover you take out.
Be sure to ask your insurer about how much cash is covered with your personal possessions insurance before taking out the policy.
If you make a claim through your personal belongings insurance, your insurer may have a single item limit – which is essentially a limit to the amount they would be willing to pay out for a specific item not listed separately.
For example, if your watch worth £2,000 is stolen and the single item limit is £1,000, you’ll only get £1,000 towards the total amount lost.
To avoid the disappointment of a single item limit, simply list your valuable items separately. You may be required to pay more in premiums, but you will be far more protected.
Although personal possessions insurance does a good job of protecting the majority of your items that you’re likely to take out of the house, there are circumstances that invalidate your claim.
That includes leaving possessions unattended (sports or camping equipment) and carelessly having items on public display, such as a sat-nav or mobile phone left in full view inside your vehicle.
Equipment related to your work or business is also likely to be excluded from your personal belongings insurance, for example, a professional photographer’s camera, an engineer’s tools, or a company phone.
As well as this, you may find that the majority of providers avoid paying out if an item is damaged due to an electrical or mechanical fault, as that is more often than not an issue for the manufacturer to deal with.
It’s worth noting that personal items insurance doesn’t usually cover damage done by general wear and tear, but it’s certainly worth going through your policy with your provider before you purchase it, to ensure that it covers everything you believe it should.
Your belongings aren’t always with you every time they are out of the house – they could be with someone else for a variety of reasons.
Providers differ in terms of the level of cover they offer you if your items are not in your possession at the time of the incident that leads to your claim, but you may find a policy that covers you if you have:
Sent an item to be repaired or left it in the care of a professional service (removal company when moving home)
Gave the item to a friend or family member to borrow
Stored the item temporarily in university, at school, in a locker, or at work
You’ll need to speak to your provider about how they can cover you for each situation, but you may have to pay a higher premium to get such flexible insurance.
Excess is the amount of the total claim that the policyholder is willing to cover themselves. For example, if you agree to pay £500 excess and the policy covers up to £3,000, the provider will only pay out £2,500 and you (the policyholder) will have to pay the £500 excess.
The higher your excess, the less you’ll pay in premiums, but you must be sure to only set a realistic amount that you’ll be able to afford comfortably.
Over-insuring yourself is like wrapping yourself in bubble-wrap every day – it’s safe, but over-cautious, and in insurance terms, being overly careful can result in overlapping policies and paying more than you need to.
Certain policies can often overlap with others, especially given the amount of add-ons that are now available with all insurance types, which means you could end up paying twice for the same level of cover.
Overlapping insurance policies is unlikely to benefit you, and paying for the same cover twice is never going to benefit the bank balance. We recommend keeping track of what your current insurance covers and avoiding the urge to over-insure yourself as you’ll essentially be paying for a duplicate product.
That said, don’t under-insure yourself either! Find a balance between having an adequate level of cover that remains affordable and doesn’t overlap with any of your other policies.
Finding the best personal possessions insurance
It’s important that you don’t simply search for the cheapest personal possessions policy when looking for belongings insurance, because you’ll likely find yourself under-insured, i.e. the policy might not cover many items and may not pay out under certain circumstances.
You should find the best, most suitable policy for you, which covers all relevant eventualities and each of the items you wish to insure.
Know the ins and outs of your policy, find out exactly what items (and circumstances) will be covered, and of course, compare the quote with a range of providers.
If you enjoy partying and summer vacations, find out how personal possession insurance could be of use to you in our festival insurance guide!