Also known as personal property insurance, this type of insurance covers your belongings. Often part of house or renter’s insurance, this protects you from having to pay to replace a much-needed laptop or the family jewels. Not everyone chooses to purchase contents insurance, but we believe it is a worthwhile addition to your budget.
The most common way to purchase contents insurance is as part of your homeowner/house insurance. You can also get it through renter/tenant’s insurance as well as Coop or Condo insurance. It is also possible to take out a separate policy solely for contents.
How Much Will I Get Back?
This will depend on a few factors. The first being the agreed-upon amount when you sign up. For coop and tenant’s insurance, you decide how much you want to insure your belongings for in the beginning. For homeowners, it’s part of or an add on to home insurance and will be a standard set rate. Typically, this is set at around 50% of the value of the building (for the contents). Unless you have high-value items that you need to declare and have written into the policy one by one and state their value.
What you get back will be impacted by whether you chose cash value or replacement cost. If you choose actual cash value you will get what your items are currently worth, with depreciation factored in. Whereas with replacement costs you will be given enough (up to a max amount) to replace your items regardless of if they’re no longer worth that much. You will get a new replacement.
Having ‘actual cash value’ will mean your premiums are lower than the full replacement option. When you go to buy your things again though you may not have enough to get the things you really wanted. You would then need to look second hand or cheaper alternatives.
There is always a deductible/excess amount. The amount you pay before the insurance pays the rest; you can set this yourself from a range of options. The higher the deductible rate the lower your premiums will be. Really you want to set a fairly low deductible rate if you know you will struggle to afford a sudden expense. Ask when you call whether the deductible rate is per claim or per item. It’s also worth checking if there’s a cutoff point. This would mean you won’t pay it a second time within the same year. Alternatively, if it’s more than two items you pay the first two only. See what their policies and procedures are around this.
Sometimes when your deductible rate is too high (say $500), and your laptop screen cracks costing $500 to fix, it’s not worth claiming on. If you had a deductible of $100 and had to claim a $500 repair on your laptop it would then be helpful to use the insurance.
Are My Things Covered When They are Not in the House?
In short, they usually are. An example of this is while moving house, your items should be covered. They should also be covered when you take them on holiday with you. If they are out of the house for a short time they should be covered. If you take your laptop to work it would also be covered if damage occurred at the office.
Extra Coverage for High-Value Items
If you have high-value items you will likely need to declare those when you apply for insurance. There may be an extra fee for particularly valuable items like professional camera equipment, valuable art, or jewelry. If you believe the contents of your house are worth over $100,000 in total you will need to ask what the maximum replacement costs are and look at adding extra to your policy.
If your belongings are likely worth around $200,000 or more, you may get a better deal and more secure options by speaking with a specialist ‘High Value’ insurance provider. These kinds of companies ensure the claims process is smoother as well, so you will be able to replace your items quickly. This is important with things like work tools and high-end technology which you need access to again as soon as possible.
Property Owned by a Business
Standard house and contents insurance does not cover items owned by a business. They cover personal items. They should be able to add on at extra cost, the ability to claim on business tools and stock but you do need to declare them. It could be worth insuring the business items separately if they are particularly valuable through a high value provider.
Who is Covered?
When you sign up for insurance they will ask you how many people currently reside at the property. Your spouse and children should be included automatically. If you have other family members like a grandparent staying with you it’s best to check whether they would be counted as dependents on your policy.
Roommates or Renters will not be covered. If you have landlord insurance or they have tenant/renter insurance they will be. However, if you insure a house in your name and then rent one room to someone their possessions are not covered. If you have a friend stay with you, they will not be covered either. You can declare when starting the insurance or add later that you would like another named insured person covered by your policy and this can be changed. It may of course incur an additional charge.
There are circumstances where guests could be covered. Enquire through your provider if this is the case. If someone is considered ‘in your care’ it’s possible their belongings are in your care as well and could be claimed on. If your daughter had a friend staying the night and something of theirs broke that may be considered for a claim.
Check to see if you are covered if you are living in a retirement village.
The safest way to be sure is simply to ask. It’s always best to speak with an actual person before agreeing to any insurance policy. Prepare a list of questions and keep a pen and paper handy while you’re on the call. Alternatively, you could ask face to face in-store.