What is Contents Insurance?
Contents Insurance typically covers the cost of repairing or replacing your personal items within your home if they’re lost, stolen or damaged. This can include things like your furniture, appliances, clothes, computer, tools and jewellery.
Most insurance providers offer contents insurance on its own or bundled, for example, as Home and Contents Insurance. This type of cover generally includes your building and permanent fixtures as well.
If you’re a homeowner, bundling your contents insurance with home insurance is often more cost efficient than having individual policies. However, if you’re renting, Contents Insurance or Renters Insurance (which usually has lower cover limits and is generally more cost-effective than contents insurance) should be enough to cover your belongings. Those are usually not included under your landlord’s insurance policy.
There are two main types of contents insurance policies:
1. Replacement value/value of your belongings
Replacement value policies cover the cost of your belongings at their market value, which can decline over time. For example, if you bought a TV for $3,000 four years ago and need to make a claim on it today, the benefit payment would likely be lower than $3,000. That’s because the age and usage of an item tends to reduce its dollar value.
New-for-old policies cover the cost of replacing belongings with new equivalent items, which may be worth more than the original items. The premium for a new-for-old contents insurance policy is often higher than a replacement value policy.
What does Contents Insurance cover?
Exactly what’s covered depends on your policy, but typically includes things like:
● Furniture and furnishings
● Appliances and household goods
● Internal blinds and curtains
● Rugs and loose floor coverings
● Clothing and jewellery
● Computers and tech
● Bicycles and sporting equipment
These items are usually covered for events such as:
● Fire (including bushfires)
● Storms, hail and lightning
● Theft, vandalism or malicious damage
● Water from leaking pipes
Some contents insurance policies may also cover costs such as:
● Emergency repairs to prevent further damage or loss to your contents as a result of an insured event
● Temporary accommodation if your contents are damaged to the extent that your home is unliveable
● Debris removal after an insured event
● Compensation for any injuries, as well as loss or damage to guests’ possessions while they’re visiting your home during an insured event.
Your contents insurance policy may also include:
Accidental damage provides cover for the cost of unintentional events, like spilling wine on the carpet or sending a cricket ball through a window. Some policies offer accidental damage as a standard inclusion, while others offer it as an optional inclusion for a higher premium.
Most contents insurance policies include a cover limit for certain items. For example, an insurance provider might agree to pay $5,000 in total for jewellery with a maximum of $1,000 per piece. If you want to insure items for more than their cover limits, you may be able to list them separately on your policy as a ‘specified item’ and cover them for their full value. Specifying items usually adds to the cost of your premium. Alternatively, you can opt for single item insurance for higher-value items which may you give you more control over your cover.
Portable valuables cover insures items you take with you away from your home, like jewellery, mobile phones, handbags or clothing. This could be included in your standard contents cover, or available as an optional inclusion for an extra cost.
As the name suggests, flood cover typically covers the cost of loss of or damage to your possessions caused by flood or flood water. Depending on your policy this may be included in your standard terms or offered as an optional inclusion.
Some policies cover motor burnout as an optional inclusion. This covers the cost of repairing or replacing burnt-out electric motors in household appliances or equipment.
It’s a good idea to check the product disclosure statement (PDS) to find out what’s covered by a specific policy (including optional inclusions).
How much Contents Insurance cover do I need?
How much cover you need all depends on your individual circumstances, but it’s worthwhile thinking about:
● Your belongings: How much are they worth and do you want to insure them for their total value or part of their value? There are contents insurance calculators that can help you estimate the value of your belongings.
● Your location: What types of events is your home most susceptible to? For example, if you live in a flood region, you might want to choose a policy that includes flood cover.
● Your preferred level of protection: Do you want cover for standard events only, or a more comprehensive range of risks?
● Your budget: How much can you afford to pay in premiums?
How to save on Contents Insurance
Want more value from your contents insurance policy? Here are a few tips to get the most bang for your buck:
● Shop around: As with any purchase, comparing different products on the market can help you find the right level of cover offered for your situation.
● Excess cover: Generally, the higher the excess you choose, the lower your premium will be.
● Simple may be best: Evaluate if you really need optional inclusions to your standard policy as they typically increase the cost of your premium.
● Upgrade your home security features: Installing a security system, deadlocks, key-operated window locks or security grills or bars could reduce your pr added.
Whether you’re a homeowner, apartment owner or renter, contents insurance can give you peace of mind you’ll be covered if something unexpected happens. Taking the time to do your research and weigh up your options can help you find the best policy option for your circumstances. And remember, always read the product disclosure statement before you make a decision on any insurance cover.