Protect Yourself From This Post-Xmas Catastrophe!

Why the gifts you received at Christmas may be at risk...

This article was first sent to Fools as part of our Afternoon email campaign.

Have you been busy playing with your Christmas presents over the last couple of weeks? Perhaps you got a new iPod, laptop, or that flash piece of jewellery you had your eye on.

Now imagine your gift was stolen or broken tomorrow - and it wasn't insured. Gulp. This is a pretty horrible prospect, but one that could become a reality for many of us if we don't act now.

Are you covered?

In a nutshell, expensive new presents may have bumped the value of your home's contents over the amount covered by your existing home insurance policy.

So - check your existing policy right away to make sure it's sufficient to cover all your new gifts (and January sale purchases).

Simply estimate the combined value of your new gear and add it to the value of the rest of your home contents. If the total comes to more than that covered by your existing policy, you'll need to sort out a new contents package - or upgrade your existing one - immediately.

Individual items

Bear in mind that items worth more than £1,500 must be specified individually in your policy.

You also need to make sure that any new items are fully covered outside the home. As I explained in Make Sure Your Home Insurance Covers This!, most people seriously underestimate the value of the belongings they carry around with them.

Finally, have a look at the very useful comment posted by Fool reader SmudgeButt at the end of this article.

In a nutshell - take photos of all your prized possessions, so you don't forget about any if you have to make a claim!

Expect the unexpected

However careful you are, you'll never be able to predict exactly what's going to happen inside your home.

You may have super-tight security and no clumsy pets, but that expensive equipment could still come to grief. According to Lloyds TSB Insurance, claimants in 2008 included:

• A man who'd accidentally shot his TV;
• A customer who'd had his glasses stolen from his living room - by a magpie;
• And several people who'd lost mobile phones and MP3 players down the toilet.

You get the idea. You can't prepare for every weird eventuality - so get that cover!

Good cover at the cheapest price

In Secure Your Home From Light-Fingered Thieves, my Foolish colleague Harriet Meyer explains what you need to consider when buying a new policy. She outlines why `extras' like unlimited cover and emergency repairs cover could be worth their weight in gold.

The good news is, there are several ways you can get decent cover at a reduced price.

No-claims discount: If you haven't claimed on your home insurance in the last few years, look for a policy offering a no claims discount.

Two in one: It can often work out cheaper to buy your buildings and contents insurance from the same provider. It also makes things simpler and less stressful if you do have to put in a claim - as you're dealing with just the one company.

Your home is your castle: Make your property more secure and you could lop chunks off the cost of your cover. Simple measures - like burglar alarms linked to the police network and good quality window and door locks - could knock 15% or more off the price.

How you pay: When it comes to shelling out for your policy, give `monthly payment plans' a wide birth. Insurers usually charge very high levels of interest if you pay in this way, so stump up all the cash at the start of the policy if you possibly can.

Alternatively, consider paying with a 0% new purchases credit card. Just make sure you clear the balance before the 0% deal runs out!

Finally, in cost-cutting terms, the single most important thing you can do is.

Shop around!

To kick off 2009, several home insurers are running special discounts and deals on their buildings and contents packages. Here are some of the main ones:

• Direct Line is offering new customers 50% off contents insurance.

• Churchill is currently offering new customers 25% off buildings and contents insurance, plus a 15% discount when you buy a policy online. It also offers various `no claims' discounts.

• Norwich Union is throwing in up to £50,000 of contents cover free when new customers buy its buildings and contents insurance together. You need to have been claim-free for three or more years on your current buildings and contents insurance.

• Barclays is currently offering £55 cashback when new customers buy combined buildings and contents insurance online. Alternatively, you'll get £20 cashback if you get either buildings or contents cover.

• And Tesco is offering £35 cashback when you buy a Standard or Finest Home Insurance policy from them (this is a Clubcard exclusive and again, is available to new customers only).

See a theme developing? New customers almost always get the best deals, as insurers fight to gain their business. That's why it's crucial you shop around, rather than simply renewing every year with the same provider.

When you've found a package you like the look of, it's also worth haggling with your existing insurer. To retain your business, they may be willing to match the price being offered by the competition.

Remember, some `fantastic' offers come with a host of difficult terms and conditions. Just make sure you read the small print - and compare a wide range of policies - before making your final choice.

Good luck!

More: Use The Fool's Home Insurance Service to help find the right deal for you | The Risks Of Buying Cheap Insurance | A Fool's Guide To Life Insurance