How Much Contents Insurance Do I Actually Need?

Before we delve into how much contents insurance you need, let’s tackle the obvious question: Do you really need a contents insurance policy in the first place?  

Well, we may be a tad biassed—we do sell insurance, after all—but a contents policy is arguably as useful as having a secure roof over your head. It improves your life by adding protection against things you have no control over—like your phone being destroyed in a kitchen fire, or your flat flooding and becoming temporarily unlivable because your neighbours left their tap on. 

What does a contents policy include?

The main sub-category of your contents insurance policy is, somewhat confusingly, also called contents. This is the area that may offer compensation in the event of a covered loss involving things like your laptop, jewellery, furniture, and so on. 

But your policy doesn’t just protect the stuff you own against fire, water damage, theft, and other perils. It’s also a safety net that can help in other circumstances. 

For instance, your policy also includes cover for temp accommodation—meaning assistance with costs you may incur if you’re forced out of your home due to a covered peril, and need to stay in a hotel and order takeout for a few days. 

Another component of contents insurance is personal liability cover. This protects you in some incidences of legal dispute or if you cause damage to the home you rent. Yes – this is not a drill – it’s called tenants liability, and it includes damage you might have caused to any fixed installations (like your sinks, floors, walls), furnishings, fixed glass items (e.g. stovetops, mirrors, windows) and damage to any impacted neighbours or other third parties.

How much contents cover do I need?

Your cover needs won’t be the same as your best mate’s or neighbour’s. Your policy is unique to you, based on your lifestyle, how much stuff you own, and other factors. Let’s say you have a dog who might someday bite a stranger—you’d perhaps want a bit more personal liability cover. And if the value of your belongings is roughly £60,000, you probably don’t want to leave yourself vulnerable with just £10,000 in contents cover.

So how do you figure out how much cover you need?

As we’ve mentioned, your policy has three main categories; when you sign up with Lemonade you’ll be asked to pick an amount for each cover. Below you can see the minimum and maximum amounts for each.

Figuring out the right cover can be tricky, and it might help to talk this through using some hypothetical examples. So let’s meet our new friends Charlotte, Freya, and Max.

Here’s what we’ll cover:

• How much contents cover does Charlotte need?
• How much temp accommodation cover does Freya need?
• How much personal liability cover does Max need?

How much contents cover does Charlotte need?

Charlotte lives in Camden. She’s 24, just finished uni, and recently moved down to London with friends after winging her way into a job as an associate TV producer. She’s a risk-taker and lives life to the fullest. She’s made some questionable moves recently—we’re not going to dwell on those—and realised she better start getting her life in order. First step? Snag some contents insurance. She knows contents cover is protection for her stuff, like her iPhone, watch, IKEA couch, and that bike she uses to commute to her new gig.

How much contents cover can Charlotte get to protect her stuff?

Between £10,000 and £100,000.

And how much does she need?

Well, let’s take a magnifying glass to the life of our pal Charlotte for a sec. After finishing her degree in Media Studies at Central Saint Martins, she carted most of her valuables with her from Hull to London.

It’s time for Charlotte to take a reasonable inventory of what she actually owns. In terms of furniture, there’s nothing much—her London apartment comes mostly furnished, so most of it belongs to the landlord. 

But she does have two closets stuffed with clothes (mostly high-street brands, nothing extravagant); her year-old MacBook Air; an extensive collection of books about advertising and media theory; a newish Android phone; a fair amount of jewellery (most of which looks posh, but is actually fairly cheap); and other odds-and-ends, like that trumpet she took up in Year 9 that’s now collecting dust under the bed. 

The big question is: How much would it cost Charlotte if all of this stuff was destroyed by a covered peril, like a fire or certain water damage? She does a quick back-of-envelope calculation and figures that it would run her £48,000 to replace her stuff. It’s not possible to set a contents limit that specific, so she rounds up to an even £50,000. 

One additional factor to consider is that Charlotte is a bit of a social butterfly. Staying home is fine—but going out is better. Since her basic policy only covers theft if it occurs in her apartment, she may want to add on Theft and Loss cover, which could protect her from theft and loss worldwide. And now that we think of it, Charlotte can be a bit of a… klutz. She’s never met a phone screen she wouldn’t like to break. So why not tack on some Accidental Loss to Mobile Device cover? It might increase her premium a drop, but she’ll thank herself later.

Bottom line: Choose your contents cover amount based on how much stuff you have and how much it would cost to replace it all.

BTW, if you need cover for your big-ticket items, such as your jewellery or fine art, you’ll want to look into adding your high-value items so they’re covered for their full worth.

How much temp accommodation cover does Freya need?

Say hello to Freya. She’s 33, and an English teacher at a secondary school in Bristol. Freya likes to think that she’s on the right track. She earns a reasonable salary and rents a small home, although she’s saving money to buy. 

Because she fancies herself a responsible type, Freya decides to purchase contents insurance. While personalising her coverage, she’s asked to pick her temp accommodation cover. 

Temp accommodation covers your living expenses if you’re forced out of your home due to specific, covered causes. So, if an over-enthusiastic date cooked Freya dinner and set fire to her kitchen, this portion of her policy might help cover the costs of a hotel room and additional expenses (such as food and laundry) that Freya might incur.

A couple of notes about temp accommodation cover with Lemonade:

1. Usually, your temp accommodation cover will be about 20% of your contents or ‘stuff’ cover. However, if you decide you need more temp accommodation cover later, you can always increase the limit (though you won’t be able to decrease it). You can also choose to pick £0.
2. Temp accommodation covers extra living expenses in the event of a loss, above and beyond what you’d be spending if nothing bad had happened. So if you typically pay £1,000/month toward rent, and you have to relocate to a hotel that costs £1,500/month, your insurance may help cover that extra £500 for you.

How much temp accommodation cover can Freya get?

Between £0 and £50,000

How much does she need?

It’s a difficult thought experiment. How on earth does Freya decide how much cover she’ll need if her home becomes unlivable? It freaks her out a bit to even imagine this happening.

But after a few deep breaths, she starts guesstimating. Since Freya is the only person covered under her policy, she works out how much she’d need to spend on things—above her normal expenses—if she’s forced out of her home. She considers the cost of a hotel room, per night (versus what she pays to her landlord), plus the cost of things like takeout, since she won’t have a kitchen to cook in.  

£100 is a good estimate for the daily cost of an Airbnb and food for a single person. So a coverage limit of £2,000 could buy food and an Airbnb for about 20 days. Ultimately, the limit you choose is down to the amount of risk you’re comfortable taking on. Freya picked £6,000. 

Bottom line: When choosing your temp accommodation cover, consider all of the expenses you could rack up beyond your normal daily budget if your home becomes unlivable for an extended period of time. Consider expenses for things like a place to stay, food, laundry, additional commute costs from the temporary location, and so on.

How much personal liability cover does Max need?

Max, 43, lives in Brighton and is married, with a pair of adorably rambunctious kids. The family rents a 3-bedroom within spitting distance of the shore. Max works as an account coordinator for an events planner that specialises in punk-rock-themed graduation parties.

If someone gets hurt on the family’s rental property and decides to take legal action, his personal liability will cover damages he would be legally required to pay.

How much personal liability cover can Max choose?

Between £1M and £2.5M. 

How much does he need?

Unless you have a working crystal ball, it’s a bit hard to know exactly how much personal liability cover you’ll need. After all, there’s no way to predict if your mate will one day break her leg while shouting along to Pulp at the karaoke party you’re hosting in your living room..

Ask yourself: How much of a hazard might your rental property present during a social occasion? It all boils down to your level of risk. 

Do you have a dog who is normally super sweet, but might bite a stranger in the future? Do you host smashing parties where pals are liable to get literally smashed? Have you got an inflatable pool in the garden?

If your answer is yes to one or more of those: not only do you have a fantastic life, but you also have a higher risk of personal injury to another. This is a case in which you’d need to bump up your personal liability limits to something a bit more suitable.

If Max really wants to amp up his legal cover, he can choose the Legal Protection add-on when he signs up for a Lemonade policy. What would he get in return?

Well, Max would enjoy additional legal protections in case of disputes related to personal injury, for example if:

• Max’s spicy dinner at the local restaurant gives him food poisoning, 
• Max’s noisy neighbours were keeping the family up into the wee hours of the morning
• Max’s employer withholds unpaid wages his employment
• Max receives faulty goods from his favourite online store
• Max had a dodgy knee surgery 

These kinds of events can be pretty pricey, so don’t underestimate your coverage needs — especially since contents Insurance can often be more affordable than you’d assume. Curious about the price? Here’s more on how much contents insurance costs (or go ahead and get your free, personalised quote right now, by clicking the button below).