First-time buyers should ensure house contents are insured, and longstanding policyholders regularly review cover, writes Caroline Madden

THE STEREOTYPICAL image of a first-time buyer is someone living on tins of beans surrounded by bare floorboards and empty shelves. Save your sympathy.

That image is increasingly outdated because, judging by the level of contents insurance being taken out by young homeowners, their lifestyle is anything but spartan.

Handbags costing more than €1,000, costly engagement rings, €4,000 plasma screens and lavish wardrobes are nonchalantly rhymed off by first-time buyers looking for contents insurance, according to Jonathan Hehir of online insurance broker insure.ie. "When they move into a house, they definitely are bringing good quality gear," he says.

The minimum level of contents insurance that homeowners can take out is generally set in the region of €20,000, but Hehir says this is very unlikely to cover all the valuables young buyers quickly accumulate.

"First-time buyers nowadays will fully furnish their homes before moving in, whereas in the past this was done on a room-by-room and necessity basis," notes Richard Kissane of EBS.

"Investments are being made in leather suites and plasma TVs, which have a high replacement value. Money is being spent on quality furnishings, such as carpets and curtains, which are expensive to replace following smoke or water damage."

For this reason, the EBS householder policy comes with accidental damage cover on all contents as standard.

"This is a huge benefit for members as a high proportion of claims are for damage caused accidentally by householders, such as spilling that glass of red wine, or a child pouring water on to a DVD player," Kissane says.

A spokesman for Hibernian agrees that the level of contents cover taken out by first-time buyers tends to be higher now than in the past.

"This is an indication of the recent influences of the Celtic Tiger economy on people's disposable income and the greater purchasing power they possess," he says.

It is also important, he notes, that longstanding policyholders regularly review their cover to make sure it's adequate. But what if you've gradually accumulated various valuables bit by bit over the years, have long since lost the receipts and have no idea what your possessions are worth?

Hehir says that the various contents insurance products offered by insure.ie cover valuables on a new-for-old basis. "That means that a 10-year-old fridge is worth maybe €10," he explains. "You have to recalculate how much it costs to replace that fridge as new."

The Hibernian spokesman advises homeowners to go around their house room by room, estimating how much it might cost in today's prices to buy replacement contents for each room.

This should be done whenever they are renewing an existing policy. Contents will include almost everything that is physically removable from the room, including floor coverings, furniture, curtains and light fittings.

For high-value items such as jewellery, it may be necessary to bring them to a qualified jeweller for a valuation certificate.

Another option for homeowners is simply to choose a contents policy that covers them for a set percentage of the sum insured under their building policy (the second element of home insurance, which provides cover for damage to the building itself).

For example, if the set percentage is 35 per cent and the reinstatement value of the house is €200,000, then €70,000 worth of contents will be covered.

"The percentage options are a good guideline," says Kissane. "However, people should consider the cost of reinstating all their belongings.

"A quick room-to-room estimation should help, not forgetting to include contents of outbuildings which may contain valuables such as gardening equipment and sports equipment."

Finola O'Donoghue, product marketing manager at Bank of Ireland Insurance Services, advises customers to review their home insurance renewal notice every year to make sure they are comfortable with the level of cover.

If the individual has put in a new high-spec kitchen, carried out significant home improvements or added an extension to their house, then they should ensure that all of this is fully covered under their contents and buildings insurance.

Equally, if the children have moved out, taking all their belongings, including expensive electronics, with them, it may be appropriate to reduce your level of contents cover.

Underinsuring your goods may be costly but overinsuring them is just a waste of money.

Both the website of the Society of Chartered Surveyors (www.scs.ie) and the Financial Regulator's consumer website (itsyourmoney.ie) provide useful tips in relation to building reinstatement costs and contents insurance.