ADVICE: being content with your clients’ cover

It could be worth de-bundling your clients’ contents cover from their buildings insurance, writes Kevin Paterson, sales and marketing director, Assurant Intermediary

While contents insurance is not compulsory for homeowners, it is more often than not packaged up together with buildings insurance. In the past, this has generally represented better value for your clients. However, the latest AA British Insurance Premium Index reported that the cost of a combined buildings and contents policy rose by 2% to £298.40, which is more than the average quoted premium for separate buildings and contents policies added together. The Index shows that the average quote for a home contents insurance policy has fallen by 3.2% to £122.34. Unlike buildings insurance, which has increased as the cost of meeting claims has been rising steadily, this isn’t the case with contents insurance where the cost of claims simply represents the cost of replacing items.

So, it might be worth shopping around for separate policies for your clients at the moment. Whether you source bundled up or separate cover, you need to drill down into the fine detail to ensure the contents policy provides the right level of cover and that your client has got his or her sums right.

As is the case with buildings insurance, it is your clients’ responsibility to get the sum insured right. When it comes to contents insurance, there is a persistent issue with under-insurance. There are few consumers who really have a handle on what it would cost to replace all their household goods, and even fewer have a full inventory of their possessions.

It is worthwhile encouraging your clients to be systematic and visit every room – not forgetting the garage, the loft, the cellar if they have one – and listing down everything. A lot of insurers provide online home insurance contents calculators, many of which can be printed off in PDF format so that your clients can go home and check their inventory. People naturally think of the bigger ticket items like furniture and valuables, but it’s amazing how many completely forget to include items like clothes and tools.

In assessing the value of items, it is important that your clients identify valuable items. Most insurers include a reasonable limit for unspecified high risk and valuable items. However, you should check to determine if this limit will be adequate for your clients and whether the single item limit is appropriate.

There are a number of optional covers available to allow you to tailor the policy to meet your clients’ needs. You might assume that accidental damage is a standard inclusion, but it is generally optional. So do take the time to check the extent of cover your clients need and can afford. Do they have items that need cover outside the home like pedal cycles, and are they looking to use them abroad? Do they keep much cash at home? If so, do they want cover for cash included in their policy?

And finally, contents insurance has become as commoditised as motor insurance, and your clients will probably be driven by price. Do discuss the excess with them and find the balance between what they can manage to pay should they need to claim, against what they want to pay for cover. If they can afford to pay a little more should they claim, this could make a big difference in what they have to pay for the policy.

Tips
&bull&ltspan class=&quotApple-tab-span&quot style=&quotwhite-space:pre&quot&gt &lt/span&gtHelp your clients to calculate the sum insured as there is a chronic problem of under-insurance when it comes to covering contents
&bull&ltspan class=&quotApple-tab-span&quot style=&quotwhite-space:pre&quot&gt &lt/span&gtCheck the limits on each section of the policy to make sure they cover your clients’ possessions
&bull&ltspan class=&quotApple-tab-span&quot style=&quotwhite-space:pre&quot&gt &lt/span&gtDiscuss optional benefits such as accidental damage – it’s often the add-ons that really make the difference
&bull&ltspan class=&quotApple-tab-span&quot style=&quotwhite-space:pre&quot&gt &lt/span&gtIf in doubt about exclusions, speak to your provider