What does contents insurance cover?
About to move home? Packing up and moving everything can be one of the most exciting times in our lives, but it’s also one of the most expensive.
After all, you need to pay for removalists, as well as stamp duty and legal fees if you’re buying, and your bond if you’re renting – and that’s even before you start making your ongoing home loan or rental payments.
The already high cost of changing homes means taking out a new contents insurance policy is probably the last thing you feel like forking out for, but the truth is, it should be one of the first.
When moving home, a new contents insurance policy should be one of the first things you look into. Picture: Getty
What does contents insurance cover?
At its most simple level, contents insurance covers the cost of repairing or replacing your household personal possessions and furnishings in case of an insured event.
Unexpected damage can occur at any time. Picture: Getty
You may be thinking that you don’t have a lot of possessions or furnishings worth replacing or repairing, but when it comes to insurance, chances are your things are worth a lot more than you might realise.
Take a moment to look around your home right now, or if you’re in the process of packing, look at the number of boxes beginning to take over your place.
What would it cost to replace everything if you suddenly lost it all?
We don’t mean you should try to add up everything and calculate what you paid for all your possessions.
We mean you should ask yourself what would it cost you to go into a store today and physically replace every single thing you own: your appliances and TV, your clothes (including that vintage sneaker collection, that suit you pull out for a wedding once a year and the jumpers your aunt knitted at the bottom of your drawer), even the food in your pantry, the plates and cutlery you use, your sound system, computer, iPad and X-Box and, well, everything…
The real cost of replacing everything
If you’re like most people, the cost of doing that will be substantial – and probably a lot higher than you estimate, says Youi Head of Pricing, Andrew White.
For that reason, under-insurance is a massive problem when it comes to contents insurance.
That’s on top of the 23% of Australians who, according to the ABS, have no contents insurance at all.
The true value of your home contents is probably a lot higher than you think. Picture: realestate.com.au/buy
What’s really covered by contents insurance
Still skeptical about the value of contents insurance? Let’s take a closer look at how it works.
“Contents insurance covers your possessions whether you own or rent,” White explains.
“It can also cover you for many of your possessions if you live in a share home.”
White points out that, if you’re a Youi customer, you don’t even have to specifically mention an item during the quote process, so long as it is valued at $15,000 or less. It will automatically be covered for insured events at your home as part of your insurance.
You can also choose to insure important items – such as wedding rings – even when they’re not at home.
Even family pets can automatically be covered for insured events at your home as part of your insurance. Picture: Getty
Contents insurance can also cover you for some not so obvious things that could still have an enormous impact on your life – not least because it also includes personal public liability cover.
This covers you if you have to compensate a third party for a range of accidents outside of the home when you’re not behind the wheel of a motor vehicle.
This might include, for example, if you accidentally hit a pedestrian while riding your bike, or if your dog injures another animal.
In this way, liability cover could save you significant time, money, and heartache.
How your home contents insurance premium is calculated
Oh, and if you’re moving home but you think your existing policy will still apply at your new place, chances are you’re mistaken.
The insurance premium you pay is based on where you live, what type of dwelling you live in (did you know, for instance, that apartments are usually much safer when it comes to theft than free-standing homes?) and what security measures you take (time to get those security doors fitted).
When you move, a whole new set of data gets applied to the likelihood of something you own being lost, destroyed or stolen.
Apartments could be much safer when it comes to theft. Picture: realestate.com.au/buy
That means the cost of insurance can change a lot, even if you’re just moving down the road. And, if you keep the same policy, you may be paying way too much, or way to little than you really need to.
For that reason, moving home is always a great time to compare insurance quotes to make sure you’re getting the best possible deal.
How to reduce your contents premium
So, if you know you need home and contents insurance but you want to save, the way to do it isn’t to deliberately underinsure yourself.
Sure, that will help reduce your premium but, if something happens, it will also reduce the amount you receive, leaving yourself substantially out of pocket.
A better approach is to work out what you need to cover and then to compare providers directly through their website or by calling them.
Make sure that you’re comparing apples with apples and that the same things are covered to the same level.
