When you make a claim on your contents insurance, there are several ways a claim may be settled, depending on your policy wording and the circumstances of the loss. Here’s a general overview.
Different insurers have different types of contents insurance products and will settle claims in different ways. It’s important to read your policy documents carefully and ask your insurer about how they would cover the items you care about, so you understand what to expect if you need to make a claim.
Generally, there are three ways in which your contents claim could be settled:
The items you’re claiming on could be repaired.
They could be replaced with a new item or the nearest available equivalent (depending on your policy).
You may be paid the market value for the affected items.
If you’re claiming for multiple belongings damaged in a single event or if your claim is deemed a total loss, your insurer may settle your claim using a combination of these options.
For AA Insurance customers, more detail on how we may settle contents claims is in the ‘How we will settle your claim’ section of our policy documents.
How would my damaged contents be repaired?
When you make a claim on a specific item and we consider it repairable, we may settle your claim by either:
repairing your item using a supplier of our choice.
paying you the amount our supplier would have charged us to repair it.
An example of a contents repair
David accidentally dropped his laptop and cracked the screen. He lodged a claim on his AA Insurance Contents Insurance policy, which was reviewed and accepted by a Customer Manager. We arranged for the laptop to be sent to one of our authorised repairers for an assessment and quote for repairing the screen. Once David paid his excess, the repairer fixed the screen on David’s laptop and it was returned to him.
How would my contents be replaced?
If your insurer offers like-for-like replacement, they will do their best to replace your contents with a like-for-like item or the nearest available equivalent when you make a claim.
The nearest available equivalent will be one that is reasonably available with the same functions, characteristics and specifications. This could mean that the nearest equivalent item may not necessarily have the same brand, price, model or colour of the damaged or lost item, but it will still match the functionality of the item being replaced.
If it’s not possible to replace the item, your insurer may pay you with cash, a voucher, or a store credit for the replacement value of the item.
An example of replacement with the nearest available equivalent
Jonah accidentally damaged his curved TV while vacuuming. He originally purchased the TV in the mid-2010s, when curved screens were a popular trend among major manufacturers.
After lodging a claim, Jonah’s TV was replaced with the nearest available equivalent. This means the replacement was determined by matching the key features of the original TV—such as size, display technology, and audio quality—with what was available at the time. Since curved TVs have been discontinued, Jonah received a flat-screen TV with comparable specifications to his original model.
How would my contents be settled at market value?
At AA Insurance, items are generally settled by repair or replacement where possible, but there are exceptions. Clothing, footwear, cosmetics or items that don’t have an equivalent replacement available will be settled at market value.
Market value is the reasonable value of the item immediately before the loss, allowing for factors like age, condition, and wear and tear.
An example of market value settlement
Charlotte’s handbag was stolen from her friend’s car. In it, she’d left the mobile phone she’d bought six months ago, half a bottle of perfume, and the remains of her favourite lipstick. She lodged a claim with her insurer and was able to supply proof of ownership for the items in the form of receipts. While her stolen mobile phone was replaced based on what was available at the time and the terms of her policy, she received a financial contribution toward replacing her perfume and lipstick rather than their full replacement cost.
Key summary
Different insurers have different types of contents products.
At AA Insurance, contents claims may be settled by repair or replacement where possible. This means that, if an insured item is damaged beyond repair, it may be replaced with a new one or the nearest available equivalent, depending on the policy and what’s available at the time.
While many items may be replaced, certain items will be settled at the market value, such as clothing, footwear, cosmetics and items that don’t have a nearest equivalent item available.
Any questions?
Now’s a great time to review your insurance. We recommend checking your details are up to date and ensuring the policy and cover you’ve chosen is right for you and your insurance needs.
If you have any questions about your insurance, need to update your AA Insurance policies or would like a quote, don’t hesitate to contact us. You can find our opening hours and ways to get in touch with us on our contact page.
This blog provides general information only and is not intended to be a recommendation or personalised financial advice. Excesses, terms, conditions, limits and exclusions apply to AA Insurance Limited’s policies. Please check the policy wording for details of cover. The provision of cover is subject to the underwriting criteria that apply at the time.
