Contents insurance - what you need to think about
There are lots of things to consider before signing up
Contents insurance covers the movable items in your home - for example your furniture, electronics etc. - rather than anything structural. This insurance isn’t mandatory, but it might be worth considering it, whether you own your home or are renting.
Here’s what you need to think about…
How much contents cover do you need?
Firstly, you’ll need to decide whether you want ‘New for Old’ cover - which pays for the original cost of your contents - or Indemnity cover, which will just cover the current value of your possessions.
New for Old cover is a bit more expensive per month, however if you do have to make a claim, you’ll be able to replace all of your belongings without having to make up the shortfall.
Often, if you’re getting contents and buildings insurance together, a contents insurance value will simply be worked out as a percentage of your buildings cover amount - this will usually more than cover the value of contents, but it’s worth making sure before you sign up and increasing the cover amount if needs be.
If it is not worked out this way - or you’re getting standalone contents cover - the best thing to do would be to go through your home room by room and work out the cost of things like your sofa, TV, bookshelves, table etc. When you add everything together, this will be the coverage you’ll need.
If you’re still not sure, the Competiton and Consumer Protection Commission has lots of information which could help.
What is covered by contents insurance?
In general, contents insurance will cover your possessions for things like theft, damage from flooding, fire damage etc.
You can also choose to add on extra cover for:
- accidental damage to your belongings,
- bicycles, or
- cover for gadgets taken outside of the home.
Some insurers may also cover you for things like the cost of accommodation if you need to move out of your house due to damage.
There are loads of different options to consider, so using a broker might be a good idea - it’ll help you to compare many different insurers and find the best policy for you.
What is specified cover? Do I need it?
If you want cover for items - like gadgets or jewellery - when they are taken out of the home, you will normally need to add this on as an extra. If you do this, you will need to decide on either specified or unspecified cover.
If you opt for specified cover - say for a bike or an item of jewellery - you will need to provide more detail to your insurer about these items and provide a specific value for each item that will be referred to in the event of any claim.
Can I get cheaper insurance by increasing my excess?
When you’re signing up to a policy, make sure you consider the excess. This is the amount of any claim you’ll have to pay before the insurance kicks in.
Often, you can get a discount from an insurer if you opt for a higher excess, but make sure you consider this carefully before signing up. You’ll need to make sure you can cover the excess in the event of any claim.