You might think home insurance is just for homeowners but if you’re a renter there is a way to insure your belongings separately and that’s with contents insurance.
Contents insurance is designed to provide cover for the personal belongings inside your home, should they be damaged or stolen. It does not provide cover for the actual bricks and mortar of your building, that’s what home ‘building’ insurance is for.
Now of course that all seems simple enough, it’s when we get into details that things start to get a bit trickier. Contents insurance policies generally provide cover for items including clothing, jewellery, computer equipment, furniture, white goods, artworks and TVs. However, exactly what items are covered will vary from policy to policy. So make sure you read through the product disclosure statement thoroughly to check that it has everything you need, before signing on the dotted line. You may have to pay for additional cover for antiques, specialist equipment and designer furniture, for example.
As there are a lot of contents insurance policies to choose from, we’ve come up with a short checklist to help you get started.
Once you have been through these steps, you should have a rough idea of what you want to insure, how much for and for what. Have a read of the frequently asked questions below for even more information on how contents insurance works. Or, if you have time for some longer reads, check out Mozo’s home and contents insurance guides hub.
What is covered under contents insurance?
What exactly is covered with your contents insurance will depend on the individual policy you opt for. Each policy will layout what is defined as contents in the product disclosure statement. Generally everything that could be counted as the ‘contents’ of your home is included. For instance, soft furnishings, kitchen appliances, DVDs, clothing and so forth.
When it comes to higher priced items, however, your insurance provider may put a cap on how much you can claim. These could be items such as expensive jewellery, watches and art collections. Although if you have something particularly pricey to protect, like a rare book collection, then you may be able to add the higher value to your policy separately. Just keep in mind that this will most likely up the overall price of your premium.
What counts as an insured event?
When reading through insurance policies you will probably notice the term ‘insured events.’ This simply means that an item is covered in the case of an event that the insurance company has deemed as eligible for claiming against. What events you are insured for will be listed on your policy. If your contents are damaged as a result of an event not listed on your policy, then your claim may not be accepted.
Insured events generally include fire, storms, rainwater damage, lightning, earthquakes and tsunamis. Other insured events can include accidental breakage of glass, theft, attempted theft, vandalism and malicious damage. Flooding cover is often available as an optional extra.
One last thing to note with insured events is that definitions of what each one is can vary from policy to policy. For instance, at the moment there is no standard definition of ‘fire’ that insurance providers have to follow. So make sure you read the definitions part of your policy carefully to avoid being stung with a rejected claim.
How do I work out how much to insure my contents for?
When it comes to insuring your personal belongings, you will need to think about how much it will cost you to replace your items if they are damaged or stolen. Remember that some things may have gone up in price - for example, buying a new laptop might cost you more in five years than it would today. This is why you need to work out the new replacement value of all items and insure to this amount, not the amount you initially paid for the item.
The best way to work out the new for old replacement value is to walk around your home and list out each item and then do some comparison shopping to see how much it would cost you today to replace this item with something similar. It is a good idea to record the serial numbers of your devices and appliances as this can help you to find a similar model or replacement if you need to.
Once you’ve drafted up your contents list, be sure to email a copy to yourself so that you have a digital version of it, just in case.
Is there a cap on contents cover?
Most contents insurance policies will have special limits that apply to items like jewellery, artwork, computer equipment, work tools, rugs. This means that in the event of any claim, the maximum you will be able to claim for these items will be capped.
You will usually have the option of purchasing additional cover for these items, which can definitely be worth it if they're value is much higher than the default limit, but it will mean that you’ll pay a higher premium.
Be sure to read the insurance PDS to make sure that you understand the limits for your policy.
What is new for old replacement cover?
Generally speaking there are two main types of contents insurance to choose from: these are ‘replacement value’ and ‘new for old.’ What and how you can claim will depend on which one of these your policy comes with.
Most insurance policies these days offer new for old replacement cover, but it is still worth knowing the difference between the two. This is namely that ‘replacement value’ will cover the value of an item come claim time, taking into account how much it has depreciated. On the other hand, ‘new for old’ cover will replace your item with one closer to the original, regardless of how old it was. Although this can vary from policy to policy.
To summarise, ‘new for old’ cover might come with a higher premium, but if you want to be able replace your item with one of the same or similar quality it could be worth it.
Will my contents be insured away from home?
The thing about contents is a lot of them can be portable. For instance, you might take your laptop to a friend’s house and if you’re unlucky it might be damaged there. Your laptop might be insured as part of your contents insurance, but is it insured away from the insured address?
Well, the good news is there is a way to cover yourself in this scenario, as most contents insurance policies offer ‘portable contents cover’ as an optional extra. This will insure items such as jewellery, laptops, clothing and bicycles against accidental loss or damage. Most will insure you if the said loss or damage happens anywhere in Australia and some may even include New Zealand. The only thing to keep in mind is that there will be a limit to how much you can claim and each insurance policy will insure different items.
What optional extras are there for contents insurance?
Most policies will give you the option to upgrade your cover with optional extras including:
Flood cover - Although some insurance providers will include this in the standard policy, a lot also offer it as an optional extra.
Underinsurance protection - Not all insurance companies offer this but it can be handy to have in case you undervalue your contents. This will usually come in the form of an agreed ‘underinsurance’ percentage. So for instance, if your policy gives you 30% underinsurance protection and you find that you have undervalued your possessions, your insurance provider will pay you up to 30% more than the agreed value amount.
Motor burnout - This is to cover electrical motor burnout for items such as white-goods, in case of power surges. Although there may be an age limit for the appliance to be eligible.
Portable contents cover - As mentioned above, this is to cover portable items while away from the insured address. Some policies may split this into ‘specified’ and ‘unspecified’ portable items.
Emergency accommodation - This generally covers some or all temporary accommodation costs, should your home become uninhabitable as the result of an insured event.
These are just some options - extras available and in what form will vary from policy to policy. It is good to keep in mind that whatever extras you add on, will up the cost of your premium.
What if I want to insure something really special?
If you have something really special, like a quaint old grandfather clock and it’s worth more than the cover limit listed in your policy, most insurance providers will give you the option to list it separately. This means that you can nominate a specific amount for the item and it can be higher than the standard limit. Just keep in mind that as with all additions this could up the price of your policy.
Do I have to pay contents insurance upfront or can I pay by the month?
You’ll have the option of paying your annual insurance cost upfront as a lump sum and some providers also offer the option of paying by the month. Generally you’ll pay less for your insurance if you pay upfront, but paying by the month can help you fit the cost of cover into your budget.
How can I save money on my contents cover?
Don’t assume that the most expensive policy will give you the most comprehensive level of cover. The goal when searching for content insurance should be for you to find the cheapest price for the content cover you need. Here are some ways that you can reduce your contents insurance costs:
- Shop around. Don’t fall into the trap of auto renewing your policy. Insurance providers have deals or incentives all the time and you can save yourself lots of money with a bit of comparison shopping.
- Secure your property. The more secure your property is the lower your premium is likely to be. Taking measures like installing locks on doors and windows, putting in a security alarm or camera and installing smoke alarms is a great way to snag yourself a lower premium.
- Multiple policy discount. If you have more than one product with any one insurance provider you could be eligible for a multi-policy discount. Even if you don't currently qualify for this discount, talk to your provider about what deals they can offer to tempt you to switch other insurance policies over to them.
- Flexible excess. You can reduce your insurance premium by opting for a higher excess amount. This means that in the event of a claim you will need to pay a higher upfront payment but your monthly insurance premiums will be cheaper.