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A home is more than just a building, it’s a safe haven for you and your possessions. Everyone insures their car but often people forget to insure their belongings. Do you really need to?
What is contents insurance?
Contents insurance is insurance that pays out if items inside a home are stolen or damaged, for instance, by a fire or storm. In some cases, the insurance company will also cover items that are accidentally damaged. Contents insurance ensures that things kept inside a home can be replaced if something happens to them.
Buying new for old
You may not realise it but if you had to start replacing all of your things from scratch tomorrow then you’d be up for quite a large expense. Shoes, clothing, and even basic items such as underwear, are accumulated over a period of time. Buying them all brand new tomorrow (new for old replacement costs) would certainly cost you a wad of cash – and what about the cost of the bed, sheets, shelves, pillows, kitchen utensils, photo frames, bike, tent and so forth? You know that replacing the TV, computer and stereo is not going to be cheap but what about these other items? It adds up. That’s why it’s wiser to insure your possessions.
Who needs contents cover?
Home owners can take out a combined home and contents policy but if you are renting the home policy is paid for by the landlord or owner’s corporation if it’s a strata building. Renters will need to take out their own contents policy as their possessions are not covered by the landlord’s building cover.
Contents-only insurance
The good news is that although it is an additional expense the cost of a contents-only insurance policy is generally very reasonable, especially if you take out a policy with a company you already have insurance with. (They tend to offer discounts). Prices can range from around $100 for a student living away from home to around $1000 per year for a family renting with a house full of possessions.
A contents-only insurance policy should be cheaper than a home and contents policy as you do not have to include the cost insuring the building into the premium.
Theft and fire insurance coverage
Depending on the policy, in addition to damage or theft of the contents, a contents insurance policy may insure against:
- objects being accidentally broken
- the home owner’s fixtures that a tenant is responsible for under the rental agreement
- valuable items such as jewellery or cameras that may be used away from the home
Each insurance policy will specify the causes of damage or loss for which the insurance company with pay out. These may include house fire, lightning or earthquake, but check the fine print. You may not be covered for some natural disasters, such as flash flooding, landslides or bush fires and the like. Make sure you are clear on what your policy does and doesn’t cover when you sign up.
Insurance calculators: how much is your stuff worth?
It can be tough putting a dollar value on some treasured items. Many insurance company websites have online tools to help you calculate the worth of your property. The Allianz contents calculator is a good example. In some cases items can be insured as a set. For instance, DVDs are worth more as a collection than individually, and insurance policies can be taken out to reflect that. For other items the calculator will give you a good estimation of what each possession is worth – right down to your socks and handkerchiefs!
