Bolster your home insurance: the 'all risks' add-on

Many people know home insurance covers them for theft or damage to their goods INSIDE their own property – but what about when they're out and about?

Most policies don't cover contents outside the home as standard, but you can bolt on an extension so they do. This is usually called 'all risks' or 'personal possessions' insurance. Here's what it means.

All risks or personal possessions cover protects property outside your home... Tell me more. This add-on to your regular home insurance policy insures your items for damage and theft when you're away from your home. It also covers your items while you're abroad – for up to 60 days a year.

It's not included as standard on most policies so you'll usually have to ask your insurer to add it at extra cost (explained later), or tick an extra box if buying online. Confusingly, it has many different names but you'll tend to find it called one of the following: 'all risks cover', 'unspecified personal possessions', 'personal effects', 'personal belongings away from the home'.

It covers you for anything portable such as gadgets, jewellery and clothing if you lose them or they're damaged or stolen. The policy is designed to cover your items when out and about as if you were in the home. So if your iPad is swiped by thieves from your handbag, your watch damaged in a fall or you lose your mobile phone in a cafe, it'll pay out.

Most insurers settle on a 'new for old' basis, ie, they replace the item with a new one, although this isn't always the case with clothing, so you'll need to double-check if this is important for you.

But it isn't as simple as offering cover for everything in your home once you take it outdoors, though: it only covers items you'd reasonably carry with you or that you would normally wear on you.

    • Jewellery (including rings, necklaces, watches)
    • Laptop
    • Tablet
    • Mobile phone
    • Handbag, wallet, purse
    • Clothing (including glasses)
    • Bicycle
    • Sports gear
    • Musical instruments

    Cash and credit cards may also be covered.

    As well as your handbag or wallet, the policy will pay out to replace any stolen or lost cash and cover fraudulent transactions on your credit card. To replace cash, you'll need to be able to provide some sort of proof of the sum you were carrying. Your bank should already pay out for any fraud you suffer in the event of a theft, so this extra level of cover won't be particularly helpful.

Lending household items such as kitchenware to friends? You won't be covered. Household items you wouldn't normally carry with you but that you might take to a friend's house or lend to them won't be covered in the event of loss.

So if you lend a desktop computer including monitor and speakers as a favour to a friend and it's all stolen from their home, you won't be covered. Similarly, lend them a microwave for a party which is then damaged in a fire, and you won't get a payout. You'll also need to watch out for the small print on the following:

  • If you lose a sports bag with a squash racket and kit in it – it's stolen or mislaid on public transport, say, or it's damaged in a fall – then you'll be covered. But if you break it during a match or while exercising, you won't be.

  • Similar to sports gear, if you're carrying an instrument – eg, a guitar – which is damaged en route to a concert, you'll be covered. Yet if it's accidentally damaged during the performance, you won't be.

  • Any damage caused by liquids is excluded. If it's just a handset you want cover for, see if mobile phone insurance is better for you.

  • You'll only get a payout if it is stolen from a public place if it is locked to a fixed street item such as a railing or bike stand. Pop into a local shop or library and leave your bicycle propped up against a wall, and a claim will be rejected. See if specialist bike insurance is right for you.

  • A claim for a handbag or rucksack that's begun to fray at the seams or wear through won't usually be covered, for example. Similarly, electrical goods that break down or simply stop working won't be insured.

Work out the value of what you need covered so you don't overspend. When you choose the add-on, you must decide the value of goods you want insured outside the home.

Say you wanted cover for a £500 bike, £500 camera and £400 iPad; you'd choose a round figure of £1,500 worth of so-called 'unspecified items' cover. You can generally choose any level up to £12,500 as standard on policies – the higher the limit, the greater the cost. If you want to insure more than this, contact your insurer.

You may have to pay separately or declare pricey items. As a rule, any single item to be insured out and about worth more than £1,000 will be deemed to pose a greater risk of being stolen (though some insurers have a higher £2,000 limit, so check). It's known as providing cover for – here's another bit of industry jargon – 'specified items', so look for this wording in policy T&Cs.

It typically applies to jewellery, designer watches and electronic goods such as high-end laptops but can also include high-spec bikes. If you've an item worth more than the policy limit that you want protected, you'll have to call your insurer to list it individually on the policy – and the insurer will usually want proof of purchase and value if you have to make a claim.

The value at which goods are deemed to be 'specified items' will vary between insurer. Any number of 'specified items' will push up the cost of the all risks add-on. If you carry a lot of valuable gadgets, eg, a laptop, tablet and smartwatch, gadget insurance could be worth considering.

INSURER                                                      VALUE OF SINGLE ITEM ABOVE WHICH YOU'LL NEED EXTRA COVER
Admiral £1,000
LV £1,500
Legal & General £1,500
Churchill £2,000
Zurich £1,500
Aviva £2,000
Direct Line £2,000

How much does it cost? What you'll pay will depend entirely on your home contents policy – and that in turn depends on your postcode, how much you insure and your claims history.

As an indication, our research found the annual cost of adding £1,000 of personal possessions to a home contents policy ranged from £12 to £15; for £2,500 of personal possessions cover, between £16 and £26 a year; and for £5,000 cover, £32 to £49.

Be prepared for a higher premium if you include expensive jewellery on the policy. Add a £5,000 ring, say, as a specified item to cover outside the home, and you'll see the premium rise considerably.

Our research shows you'd expect to pay a typical extra £80 a year for this to be covered while out and about. And remember, this will be on top of the cost of the add-on itself.

Got kids at uni? They can benefit too. If you've a son or daughter studying at university with a mobile or laptop, your add-on can give them extra protection too.

And don't forget it's already the case that your home contents insurance may automatically cover them against theft or damage under the 'temporarily removed from the home' section while they're a student. The cover only applies for items while they're in student digs and as long as the parents' home remains the son's or daughter's main permanent address (see Student MoneySaving for more tips 'n' tricks).

Any claim on the add-on will affect your home contents policy. You'll have to pay an excess (usually, but not always, the same as that picked by you for the original policy) for each claim. However, any claim you do make will affect your premium at renewal – and affect any no-claims discount you may have built up.

Be careful to conceal items in a car. One of the add-on's biggest selling points is a payout if your items are pinched from a locked, unattended car. But most won't pay out if you haven't locked your item in the boot (and hidden it from view) or concealed it in a glove box.

Leave a handbag under a coat on the front seat or wrap a tablet in a jumper on the floor, and you won't be covered. Most car insurance includes an element of this already, known as 'personal effects' cover. However, it's generally limited to a total of £200 regardless of what is stolen.

Is the add-on worth it? A personal possessions add-on is a policy that everyone should consider. Whenever you step outside the home, you'll usually be carrying a mobile, wearing jewellery, sporting a bag and perhaps wearing an expensive article of clothing – and because we do it daily, it's easy to forget just how much it's all worth.

Think of it as a portable home insurance policy you can take wherever you go – if your personal items are stolen, lost or damaged, the add-on will pay for them to be replaced. It's a small outlay in comparison to the cost of replacing it.

Put bluntly, whether to get it will also boil down to a pertinent question: are you a loser? We don't mean to call you names, rather that if you're likely to leave a bag or wallet in the back of a taxi or have a tendency to be accident-prone, then the add-on will be worth it.

But if you're more careful and make a habit of taking extra caution with valuable goods when in public, you'll have much less need of it. It will be a question of your attitude to risk.