Home contents insurance gives the home owner or renter peace of mind by covering the financial cost of replacing or repairing possessions. Almost everything you own can be covered by contents insurance, including furnishings, computers, white goods, electrical appliances, equipment, toys and even collections such as stamps or coins.
As we accumulate possessions it becomes imperative to protect our investment with insurance. Home contents insurance covers items belonging to every family member, and can even include items belonging to visiting friends as long as their name is also listed on the insurance policy. Items that are not covered include permanent building attachments. These will need to be part of a separate ‘home insurance’ policy. Many people combine home and contents insurance to cover both the house and possessions.
Renters need to be aware that their personal belongings are not included in the landlord’s insurance cover.
Types of contents insurance
You may choose to insure all your possessions, or just some of the more valuable items, as more cover will result in higher premiums. There are two general types of contents insurance cover: Replacement Value or New for Old.
- Replacement Value: This cover will take into consideration the value of your possessions according to their age, general state of deterioration, and other factors determining their value. Your payment will reflect the current value.
- New for Old: This cover enables you to purchase a brand new item to replace the stolen or damaged one, regardless of age or condition. New for Old contents cover incurs a higher premium due to added expenses for the insurer in the case of a claim.
It’s important to review your existing policy on a yearly basis to add any new items to the list of insured possessions. The review will also give you an opportunity to re-evaluate the replacement value of possessions and possibly lower your premium.
What events are covered?
Safeguarding your possessions is a serious business, and many people like to have everything covered for almost any situation. However, the most common and least expensive insurance option is a ‘defined events’ policy that covers burglary, fire and other events such as flooding. A defined events policy provides flexibility of cover by adding any potential risks to you possessions according to your location and type of dwelling.
Broader (and more expensive) cover can even include accidental damage, including breakages, resistant stains, or other unexpected incidents where damage has occurred to you belongings. Policies can be expanded to include valuables used away from home, such as cameras and sports equipment. It’s worth investigating several insurance companies and their individual policies, as there can be limitations or restrictions for some types of cover.
It’s also important to take time to list extremely valuable items separately in you policy to ensure they are adequately covered in the event of a claim. Although additional premiums may be incurred for expensive items, the peace of mind will be worth it.
If you are considering getting contents insurance any time, now is the time to start planning. A good first step is to make an inventory list of all your belongings, including the value to replace all items.
Secondly, hold onto receipts, numbers, proof of ownership forms, and even take photos of your possessions. These will all be helpful in the event you need to make a claim. Vague descriptions will not be of assistance to insurance companies.
You will probably be surprised (and quite pleased) when you realise the full value of all your belongings. Accumulation takes time for most of us, and valuables become an important part of our identity, and well worth protecting. Try a contents calculator or Inventory Checklist and make a start today.