Whether you rent or own, it's what's on the inside that counts. Make sure all your prized possessions are protected if things go pear-shaped.
Want to protect your things? Compare contents insurance policies.
Contents insurance covers the cost of repairing or replacing your possessions when they are stolen or damaged due to an insured event. It covers everything from furniture and appliances to clothing, jewellery and even your TV, offering financial protection if any of your items are damaged due to fire, storm, flood,theft and a wide range of other risks.
There are two types of policies available:
- Replacement-value. Replacement-value policies only cover your possessions for their current market value, and most items depreciate in value each year. As an example, while your big-screen plasma might have been worth $5,000 when you bought it a few years back, if it is destroyed by an insured event and you make a claim, the benefit you receive will reflect its current value, which will most likely be a whole lot less than its purchase price.
- New-for-old. New-for-old policies cover the cost of replacing stolen or damaged items with new equivalent items. This type of policy provides a higher level of protection and therefore tends to be more expensive than replacement-value contents insurance. However, it is now much more common than replacement-value cover.
If you’re uncertain whether or not contents insurance is worth the expense, take a moment to think about the value of everything you own. Go through each room in your home and list all the items you see – TVs, furniture, white goods, rugs, clothing, beds and everything else.
Once you’ve got a rough idea of the total value of everything you own, think about how you would cope if they were all destroyed, for example if your home burned down in a fire. Would you be able to afford the cost of replacing every single item from scratch?
If the answer is no, this is why you should take out cover. From fire and storm to freak accidents, burst pipes and even burglars, no matter where you live there are several risks that could damage or even destroy your possessions. Having contents insurance in place ensures that you can cope financially in case something ever goes wrong.
Contents insurance is designed to cover damage to or loss of the contents of your home. This includes cover for a wide range of items, such as:
- Carpets and curtains
- Furniture and furnishings
- Household goods and appliances
- Internal blinds and loose floor coverings
- Clothing and personal effects
- Swimming pools which are designed to be dismantled and moved
- Sporting equipment
- Portable electrical equipment
The best policies will cover your personal possessions against a wide range of events, including:
- Storm, hail and lightning
- Vandalism or malicious damage
- Sudden impact
- Accidental glass breakage
- Accidental damage (sometimes available as an option)
- Flood (sometimes available as an option)
- Water from leaking pipes
- Earthquakes and meteorites
Finally, contents insurance also offers a range of additional benefits:
- Legal liability cover if you’re held responsible when someone else suffers an injury or property damage
- Replacement of locks and keys after theft
- Cover for credit card fraud resulting from the loss or theft of credit cards
- Cover for contents kept in the open air at your home
- Cover for contents belonging to guests
- Cover for contents temporarily removed from your insured address
- Food spoilage costs
- Emergency repairs to your building to prevent further damage to your contents
- Cover for damage caused by the burnout of electric motors
- Cover for portable valuables while they’re away from home
Yes, contents insurance can provide cover for your personal valuables, including items such as jewellery, smartphones, computers, cameras and more. However, it’s important to be aware of any limits that apply to cover – for example, your laptop may be worth $3,000, but your insurer may only pay a maximum benefit of $1,500 for any one item.
Keep an eye out for portable valuables or portable contents insurance, which is included as standard on some policies but available as an extra-cost option on others. This provides cover for those important items you often take with you when you leave home. You can protect them against theft, accidental loss, or damage at home, when you’re away from home travelling in Australia or New Zealand, or overseas anywhere in the world for a limited period of time (typically 30 days).
Contents insurance for phones
If you’re looking for cover for your smartphone, computer, camera or other important electrical items, look for a policy that provides cover for portable contents. This ensures that those gadgets you take with you anywhere you go are covered at home and away from home, providing cover for theft and accidental loss and damage.
If you need to put some or all of your contents into a storage facility for a few months or longer, the good news is that many contents insurance policies will provide cover for your possessions while in storage. This means you’ll be protected if your belongings suffer loss or damage due to any insured event, for example fire, storm, theft and flood.
However, terms and conditions apply. For example, your stuff may need to be stowed in a lockable and fully enclosed storage unit that is located in a commercial storage facility and accessible only by you.
If you need to put stuff into storage so you can renovate, downsize or just find some extra space at home, contact your insurer to find out whether they’ll cover you.
Moving house and wondering whether your policy will offer any protection for your belongings? The insurer can cover your contents at both your old address and new address, but you’ll obviously need to inform them when your belongings will be moved to a new address. This may also affect your premiums – for example, if you’re moving to a suburb with lower theft and burglary rates, cover may be cheaper.
Many policies will also offer cover for your contents in transit, but terms, conditions and limitations typically apply. For example, while you will typically be covered if the removal truck is involved in an accident, you may not be covered for any damage that occurs to your belongings while they are being loaded or unloaded from the vehicle.
If you’re planning an upcoming move, speak to your contents insurer about whether you’ll be covered. If you’re unhappy with their level of cover, you may also want to consider household removal insurance.
When comparing policies, keep an eye out for the following features:
- Cover that’s right for you. Does the policy provide protection against all the risks that may cause damage to your contents? For example, if you live in a flood-prone area, is flood cover included? If you own a number of expensive jewellery pieces, are they covered by the policy?
- Flexibility. Can you tailor cover to suit your unique needs? For example, can you exclude any extra-cost covers you don’t need, or increase your excess in return for a lower premium?
- New-for-old cover. Policies that provide new-for-old cover are more expensive than policies that cover the current value of your items, but this is because they offer a higher level of cover.
- Accidental damage cover. Check whether the policy covers you for accidental damage to your contents, for example if you accidentally break your TV. Having this benefit included in your policy can provide greater peace of mind.
- Personal valuables cover. Some insurers will also offer the option of protecting personal valuables when they’re away from home. This includes items like cameras, smartphones and jewellery, so it’s worth checking if this optional extra is available should you need it.
- Efficient claims service. Check to see how quick and easy it is to make a claim with the insurer? Does the provider have a good reputation for paying out successful claims promptly and without any hassle?
The best contents insurance is the policy that matches all of your cover requirements. To find the right cover for your possessions, follow a few simple steps:
Step 1: Assess your cover needs. The first thing you need to do is think about what you want in a policy. What items do you want to cover? How much cover do you need? What are the essential risks you want protection against? Once you answer these questions you’ll have a better understanding of what to look for in a policy.
Step 2: Consider your budget. How much can you afford to pay? How much are you willing to pay? Cost will be an important factor when choosing a policy, so work out your budget before you start comparing policies in your price range.
Step 3: Compare policies. Now it’s time for the nitty gritty. Compare policies from a range of insurers, looking at the benefits, limits and exclusions of each policy. Remember all these features when you obtain quotes from each potential insurer – this will help you find the contents insurance that offers the best value for money and is the right fit for you.
The right level of cover depends on a few important factors:
- Your possessions. What contents to you want to insure? How much are they worth?
- Your budget. How much can you afford to pay for cover?
- Your risk tolerance. Do you want comprehensive cover against a broad range of risks, or would you prefer a cheaper policy that only offers essential protection?
To help work out exactly how much cover you need, it’s often helpful to create a checklist of all the items you want to protect. Go through your house one room at a time and make a list of all the important belongings you need to insure. For example, in a living room this list might include:
- DVD player
- Coffee table
- Dressing table
- Bedroom furniture
By listing all the items you want to cover and tallying up their combined value, you’ll gain a much clearer idea of how much your contents are worth. Then you can think about how you would afford to replace them if disaster struck, for example if you lost everything in a fire. Planning for this sort of worst-case scenario will help you work out exactly how much contents insurance is enough.
Calculating contents insurance: Think replacement value, not worth
It can be easy to end up with contents insurance without really thinking about the amount of money you would need to replace everything you own.
- Keep track of your belongings. It can be hard to keep track of all your belongings and remember their value, especially if you haven’t written them all down. Over the years you may have bought new valuables or received expensive gifts. If you haven't reviewed your home contents since you first took out insurance many years ago, it might be time to take another look.
- Costs add up. Some of your old pieces of furniture might not seem that valuable any more, but if you lost them in a fire, the cost of replacing them would be huge. That old couch you probably couldn’t sell for $50 could cost more than $1000 to replace.
- Cover for all scenarios. Those small, valuable items like laptops, cameras and jewellery are at risk of theft. Thieves are not likely to steal larger items, such as fridges, curtains, washing machines and beds, but they can still be destroyed by fire or flood.
- Get an accurate estimation. You might try to estimate the total value of your possessions by doing a quick mental calculation and using that figure as your insured amount. But you’ll get a far more accurate figure if you walk through each room of your house and write a list of every valuable item you own and its value. You’ll be surprised at how much it would cost to replace everything in the event of a fire.
- Keep an inventory. An inventory could be as simple as listing all your possessions and their value. Alternatively, there are a range of inventory templates available online that you can get through insurance companies.
Remember, it’s not just the big items you need to include, such as furniture, whitegoods, TVs and computers. Other things, like small appliances, clothing, jewellery, curtains, rugs, books, toys, kitchen items, linen, musical instruments and sports equipment, will all be expensive to replace and should be included in your estimate. And don’t forget items outside the house, such as tools, barbecues, lawnmowers and furniture.
What is underinsurance?
If you buy contents insurance but underestimate the amount of money it would take to replace all your belongings, you are underinsured.
The Insurance Council of Australia estimates that more than one third of Australians don’t have contents insurance and over a third of those that do have contents insurance are underinsured.
When calculating insurance payouts, insurance companies don’t simply pay the full amount of the value of the possessions you lost. Instead, they take into account the insured value.
The insurer will value the contents of your property and then calculate how much you had underinsured your possessions by. The insurer will then pay out an amount in proportion to the underinsurance.
Learn more about underinsurance and how to avoid it.
When comparing contents insurance, it’s also important to be aware of what a policy doesn’t cover. These are the general exclusions, and the product disclosure statement (PDS) will contain a list of situations, circumstances and events where no cover will be available, such as:
- Loss or damage occurs because building work or renovations are being carried out at your home
- The loss or damage is caused by actions or movements of the sea
- Your claim arises from breaking the law
- Loss or damage is caused by a computer virus or hacking
- Your claim arises due to a deliberate action by you
- You fail to take reasonable care of your contents
- You fail to properly secure your home
- The loss or damage is caused by a mechanical or electrical breakdown
- The loss or damage is caused by wear and tear or gradual deterioration
- The loss or damage is caused by rust, rot, mould, mildew or corrosion
- You leave your home unoccupied for an extended period of time, for example 60 consecutive days or more
- It’s for consequential loss of any kind
Check the PDS for a full list of the exclusions that apply to your policy.
How much does contents insurance cost? The answer depends on a number of factors, including:
- Your level of cover. The more expensive the items you want to protect, and the higher the level of cover you select, the higher your premiums will be. Adding optional covers to your policy will also drive premiums up.
- Where you live. Insurers will consider the location of your home when calculating your premiums. For example, if you live in a flood-prone area or in a suburb with higher than normal burglary rates, expect your premiums to be higher.
- How secure your home is. If you have measures in place to deter thieves and burglars, for example, deadbolts and a state-of-the-art alarm system, you could enjoy cheaper contents insurance.
- Your claims history. How often have you made claims on your home and contents insurance policy in the past? If you’ve submitted claims frequently over the years, you can expect higher premiums.
- The excess you choose. You will typically be able to adjust your excess amount and vary your premium as a result. A higher excess will result in lower premiums, and vice versa.
To get a better idea of how much you can expect to pay for cover, obtain quotes from multiple insurers. You can then compare policies to sort out which one provides the best value for money.
That’s the million-dollar question, and one most homeowners have asked themselves at one point or another. To find the answer, take a moment to think about what would happen in a worst-case scenario, such as if your house burned down and you lost everything. The emotional impact would undoubtedly be huge, but what about the financial impact?
Would you be able to afford to replace all your worldly possessions – furniture, clothing, white goods, TV and all those other essential items that make your house a home?
For most people the answer is a big fat no, which is why contents insurance is a worthwhile investment. Like any other type of insurance, it’s something you hope you will never actually have to use, but paying for cover is just one of life’s necessary expenses. So if the unthinkable does happen and something goes wrong, you can enjoy the peace of mind that comes with knowing you will be financially protected.
Want to reduce your contents insurance premiums? There are several simple ways you can cut down on the cost of cover, such as:
- Shop around. The simplest way to find affordable cover is to compare a range of policies and quotes. Of course, remember that just because a policy offers the cheapest policy doesn’t mean it’s right for you, so check out the full cover features before choosing an insurer.
- Choose a higher excess. If your insurer offers a flexible excess, you may want to consider raising this excess in order to lower your premiums.
- Look out for discounts. Many insurers offer discounts that can help you enjoy significant savings on the cost of cover. These include bundling discounts , online discounts , multi-policy discounts , loyalty discounts , and seniors discounts .
- Minimise claims. Making numerous claims on your policy can increase the cost of cover, so consider whether it’s really worth making a claim before notifying your insurer.
- Don’t buy cover you don’t need. Before you start shopping for a policy, take some time to think about how much cover you need and what risks you need to be protected against. You will then be able to choose a level of cover that’s adequate for your requirements, and can avoid adding unnecessary extra-cost options to your policy.
- Review your policy regularly. The contents of your home are always being changed, updated and upgraded, and so too are the policy options offered by Australian insurers. With this in mind, it’s a good idea to regularly review your policy and work out whether you may be able to get a better deal somewhere else.
If you’re renting a home, you don’t need to worry about insurance cover for the actual building you live in – that’s the landlord’s responsibility. However, you do need to worry about insurance cover for all your stuff inside the house, like your furniture, white goods, electrical appliances, clothing and more.
The good news is that many Australian insurers offer specific contents-only insurance policies designed to suit the cover needs of renters. These policies can protect your belongings against loss or damage caused by a wide range of risks, including fire, theft, storm, vandalism, accidental damage and even flood. There’s also cover for your legal liability if someone suffers an injury at your home.
Check out our guide to renter’s insurance for more information on how to compare and choose a policy as a tenant.
As a landlord, you might be wondering whether you need any cover for your investment property. Sure, home insurance is essential to cover the building itself and any permanent fixtures, but what benefits does contents insurance offer for a landlord?
Well, it can cover all the items you own at the property, including:
- Carpets and rugs
- Electrical appliances
- Portable household items
- Curtains and blinds
It provides protection against loss or damage due to fire, storm, theft, vandalism, flood and a wide range of other insured events, while also covering theft or malicious damage caused by tenants.
Combined with all the usual benefits that home insurance has to offer, not to mention protection against loss of rental income caused by a range of events, the purpose of comprehensive landlord insurance becomes clearer. For more details on choosing a policy, check out our comprehensive guide to landlord insurance.
There are a few important risks you should be wary of when comparing and choosing a policy:
- Under-insuring. This is a common trap and one that can have significant consequences for your financial wellbeing. Instead of compromising on cover to save a few dollars on premiums, make sure that you purchase enough cover to replace all of your contents in case the worst happens.
- Paying for cover you don’t need. It’s also important to check that you’re not forking out for benefits you’re highly unlikely to need. For example, your policy may include flood cover as standard, but if you live in an area that’s not prone to flooding then you may not need this type of cover.
- Not checking the exclusions. Did you know that your policy may not provide cover if your house is being renovated, or if you leave it unoccupied for an extended period of time? You don’t want to get a nasty surprise when you go to make a claim on your policy, so check the list of general exclusions carefully before buying cover.
- Not reviewing cover. Are all the belongings in your house exactly the same as they were five or even ten years ago? Probably not, so it’s important to regularly review your contents policy to make sure it still provides an adequate level of cover.
If you need to make a claim on your contents insurance, your insurer will be able to provide details on how to lodge your claim. You will generally need to:
- Contact your insurer. Contact your insurer as soon as possible after an insurable event occurs. This can be done either online or over the phone.
- Fill out a claim form. You’ll need to provide full details of the event that has occurred and the loss or damage to your contents as a result. This is usually done by completing a claim form, which is often available online but can also be posted to you by the insurer.
- Provide supporting evidence. Your insurer may request evidence to support your claim, such as photographs of the damage and receipts, valuations and proof of ownership of the lost or damaged contents.
- Co-operate. The last thing you need to do is co-operate with the insurer throughout the claim. Be upfront and honest at all times and your claim will be processed as quickly as possible.
There are also a few different ways in which an insurer may settle your claim. They may:
- Repair or replace the stolen or damaged items
- Pay you the cost of repairing or replacing the items
- Pay you a cash settlement
- Give you a gift card
There is no such thing as the best home and contents insurance; instead it’s about finding the policy that’s best for you. To do that, you’ll need to think carefully about the type and level of cover you need, and then compare policies from a range of insurers.
By comparing the features, cover limits and exclusions of a range of insurers, you’ll be able to find a policy that provides the right financial protection for your treasured possessions.