Contents insurance covers items and valuables that you own in the event it is accidentally damaged, lost or stolen. Natural disaster events are included. Largely, it insures the contents that are inside in your house. Consider for a moment all the things you own: electronic gadgets, jewellery, clothes, bags, whitewares, appliances, furniture, sporting equipment, artwork, etc.
Another key protection that is often overlooked but is included within a contents insurance policy is Liability cover. This means that if you accidentally damage someone else’s property, you are also covered. An example could be going into a store and accidentally breaking something which you have not paid for or if you accidentally ran your trolley into someone’s car at the supermarket.
What are the common items covered by contents insurance
One of the common category of cover in contents insurance is technology gadgets such as TV, laptops, mobile phones, even tablets and headphones. If you're an Apple fan, that would cover the entire range of their smart tech from MacBook to iPad to iPhone, AirPods and even an Apple Watch. You can read more about AppleCare vs Contents insurance. Besides protecting against accidental damage, contents insurance will also cover it for theft and loss.
Other common items are whitewares such as fridge, washing machine and dryer, and also furniture including sofas, beds and dining sets can cost in the thousands of dollars easily. While less likely to be stolen, these items are costly to repair or replace if accidentally damaged in a fire or natural disaster such as a flood.
Jewellery and watches are also common valuables and items that people look to cover as part of their contents insurance. Wedding rings or bands, necklaces, earrings, bracelets especially ones made of precious metals and precious stones such as diamonds. These are often not only costly but also has a sentimental value attached to them.
Uncommon things that are covered by your contents insurance
Besides physically covering the items you own, most contents insurance now provides for temporary accommodation cover. This covers the cost of temporary accommodation in the event that the place you are living in is uninhabitable. This could be due to a fire or natural disaster such as a flood and requires you to seek an alternative temporary accommodation such as a hotel or short term rental property. This could quickly cost thousands of dollars to rent temporary accommodation.
As covered earlier, Liability cover comes with every contents insurance policy we have seen. This means it offers cover if you accidentally damaged someone else’s property or valuables. Breaking something in a store or someone else’s home (assuming they are not covered), or running your trolley into someone’s car at the parking lot, etc.
Most insurers also provide cover for food that has gone bad in your fridge as a result of your fridge breaking down or if the power accidentally went off.
Some insurers have added additional benefits like cover for your pet’s vet bill if it gets into an accident with a vehicle (Tower’s Premium policy - read more below), or providing cover for your family member that is in a rest home or professional care facility (AA Contents).
What does contents insurance not cover
It does not cover other people’s contents. For example, contents owned by your flatmates, tenants or boarders. It also applies to your visiting friends and family staying with you, their items are not covered.
Another misconception is that something that breaks or stops working is covered. This is not true. For example, your laptop or mobile stops working because it is old and due to wear and tear. This is not covered. Only accidental and sudden damage caused by an event such as dropping it, having it stolen or damaged in a natural disaster is covered.
Do note that not all contents insurance policy is the same. Especially for the lower tier covers, they may not cover basic things like your mobile phone or laptops. AA Limited Contents insurance is an example. Mobile and laptop cover is not included by default, they are add-ons that has an additional cost.
What is the best contents insurance policy
It depends on what items you have. Each insurer and their policy can cover different valuables and have different limits. One key difference is whether the cover is for Market Value (e.g. Indemnity) or Replacement Value i.e. the full value which you purchased the item for or cost for a replacement brand new. Typically, the lower tier covers will only offer Market Value cover. As an example, if you bought an iPhone 11 for $1,500 a year ago and it was stolen, you will be insured for its current market value which will be lower than what you had paid for and not enough to replace it with a brand new iPhone. It could be a payout of $800 based on current market value.
Ultimately, the best policy when it comes to contents insurance will depend on what valuables you have and how much the item is worth.
There are other benefits within different policies that could make it better than others. For example, with Tower’s Premium cover, they off a unique benefit “Veterinary fees for your domestic pet” which covers up to $500 your vet fee if your domestic pet (e.g. dog or cat) is injured in an accident with a motor vehicle.
If you are looking for a policy with the highest limit and cover, from our research and Market Scan results, Tower comes out on top. Generally, they offer much higher level of cover and are more generous with their benefits (e.g. the vet cover above). Comparing a couple of benefits: Keys and locks cover is covered for up to $2,000 with Tower whereas AA does not provide cover and AMI is up to $500. There is also no excess on eyewear cover for Tower but AA makes this a $69 add-on and AMI does not provide for this and State only has the same for over 55 year old.
Market Scan is the easiest way to look at benefits across different insurers. It also brings back prices so you can find the best contents insurance comparison.
How much cover should I get for my contents insurance
The amount of cover to purchase is important. The easiest way to do this is to either make a list of all your valuables and the purchase price or use an online contents calculator such as the one available on Quashed or Tally that is provided by State.
On average, we have seen contents insured for roughly $30,000. This could be as low as $2,000 and can be as high as in the hundreds of thousands of dollars (think expensive artwork, furniture and state of the art technology gear). The lowest insured amount we have seen offered by an insurer is $2,000 by AA under their Limited Contents cover.
You would want to be sure that the items you think you are protecting are covered by the contents insurance policy you purchase. Every insurance policy will have maximum cover limits for each category of items. For example, for jewellery cover Tower’s Premium contents policy has a limit of $30,000 ($10,000 limit per item) while State’s Comprehensive has a limit of $15,000 ($2,500 per item). When it comes to jewellery, you should consider getting it looked at by a gemologist or valuer so they can properly detail and document your jewellery. GemLab is one of the well established options having been in the business for more than 30 years. Having this will make it easy for you if you ever need to make a claim on your jewellery. You can store this document provided by GemLab on Quashed so that if you do need to make a claim, all the information is there in one place. To learn more about why you should consider getting your jewellery valued and hear how this has helped Kiwis, read this article "why get my jewellery valued for insurance?"
What does it mean to have a specified item on your contents insurance
This means that you have an item that falls outside the limit of what the policy covers. For example, you have a wedding ring that costs $5,000 but the policy you have e.g. AMI Advanced has a limit of $3,000. This means that you have to specify the item to the insurer when purchasing so that the item can be included in your cover. If you do not specify the item, the insurer will only cover the item up to the limit or in some cases not cover it as it falls outside the limit on the policy.
How much is contents insurance
Let’s take a quick look at how much it costs for $75,000 of contents insurance in Auckland for a 35 year old in an owner occupied property across the four main insurers AA, AMI, State and Tower across their top tier cover:
AA Contents - $540.35 yearly with a $300 excess
AMI Advanced - $614.07 yearly with a $250 excess
Tower Premium - $679.10 yearly with a $250 excess
State Comprehensive - $538.40 yearly with a $250 excess
If we look just at the price, we’ll see that AA Contents and State Comprehensive are the cheapest cover with AA’s at a slightly higher excess. However, if we were to include AA Contents add-ons to have excess free claims on hearing aids and glasses, it brings the yearly cost up to $678.35 which is almost the same as Tower’s which has those benefits included. Therefore it is important to look at what the benefits are within the policy. An easy way to do this is to use Market Scan on Quashed, in just a few clicks it brings back not only prices but also a side by side comparison so it is easy for you to see which policy will best work for you.
What is the cheapest contents insurance
Typically, cheaper contents insurance provides less cover or limits. One way insurers can make it affordable is for the cover to include less benefit. If you do not have too many valuables and the items are not expensive, then a lower tier cover such as AA Limited, Tower Standard or State Essential may work well for you. Let’s take a look at $10,000 of cover in Auckland for a 35 year old that is renting across the four main insurers AA, AMI, State and Tower across their lowest tier cover:
AA Limited - $216.98 yearly with a $300 excess (does not provide cover for mobile or laptop)
Tower Standard - $348.00 yearly with a $250 excess
AMI and State do not allow online quotes for their lowest tier cover.
Price wise, AA Limited policy is cheaper but does not cover mobile phone nor laptop/tablet. These are additional add-ons that can be purchase for $49 each bringing the total to $314.99 if both are selected. Once again, it will be worth taking a quick look through a free comparison tool such as Market Scan so you can discover the benefits within the policy and see if it works for the contents you have.
How to save on your insurance
There are a couple of ways to save on your insurance including your contents insurance. First, check out the different options in the market. Use a tool like Market Scan to easily do the comparison for you every year. Price changes and sometimes it can increase 20% or more. Secondly, know what you have so you can find a cover that is suitable. You may only require a lower tier of cover as most of your items or valuables are not expensive and require a higher limit of cover. Third, think about increasing your excess. This is the amount you will need to pay at the point of a claim. The higher your excess, the cheaper your premiums will be. Lastly, think about having your contents insurance with the same company your car or home insurance is with. There are often bundle deals to be had. The downside here is that even with the multi-policy discounts, it can still be more expensive than having it with another insurer and while say the Car or Home insurance policy might be great in terms of its cover, the Contents may not be.
What do I need at claim time
Most insurers will require proof of ownership of the item when you are making a claim. If the claim is in the thousands of dollars rather than the hundreds, the investigation will be more thorough. Having receipts, photos of the item and proof of ownership through a bank statement showing the purchase all helps. One way to make it easy for yourself is to snap a photo of the receipt and item and store it with your policy on Quashed so it is readily available if you need it. Quashed is a free to use app that allows you to manage all your insurance policies in one place online. You can simply add your photos and receipts to the contents policy document. That way if you need to make a claim, you can easily retrieve it saving you the hassle.
Your insurer will require you to complete a form in order to make a claim. You will need to state what happened and why there is a need for a claim. If your contents was stolen, you will usually need a police report. At claim time, be sure to check your policy wording to see what you can claim for and the limit. Sometimes insurers do get it wrong and offer you a lower limit on the claim. It has happened.
Contents insurance vs Renters insurance
Renters insurance is the same thing as contents insurance. Insurers may advertise it as renters insurance but you will be redirected to their contents insurance. This is probably to help make it more relatable for people that are renting to search for the cover. Home and contents insurance usually go together and might be confused with only being insurance for homeowners. So if you’re renting, you can simply search contents insurance and it is for you as well, not just homeowners.
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