We get it—when you're juggling a busy household or career, sorting out contents insurance isn't exactly at the top of your fun list. But here’s the real talk: if disaster strikes and your stuff gets damaged or stolen, you'll want to know you're properly protected. The key? Getting your sum insured right. This is the maximum amount your insurer agrees to pay if you need to make a claim. Just keep in mind that the actual payout depends on your policy terms.
So how do you figure out exactly how much coverage you need? No stress—working out the right sum insured doesn’t have to be a brain-melter.
Let’s break it down and make sure you’re covered without emptying your wallet.
Step 1: Take an inventory of your stuff
Taking an inventory of your belongings is easier than you might think. The first thing you’ll want to do is take a good look around your home. Walk through each room and list everything you own—from furniture and gadgets to those small items that quickly add up. As you create your list, include everything from essential furniture to smaller items, such as:
Electronics: Laptops, phones, and TVs
Furniture: Couches, dining tables, beds
Kitchen appliances: Fridges, dishwashers, microwaves
Clothing & Personal Items: Jewellery, clothes, shoes
Outdoor Gear: BBQs, bikes, outdoor furniture
As you go, take note of any high-value items like your jewellery or artwork—these may need special mention in your policy. Curious about mastering contents insurance? Dive into our 'Further Reading' section below.
Step 2: Estimate the replacement cost
Now that you've got your list of belongings, the next step is to figure out how much it would cost to replace them. Here’s a quick tip: focus on the replacement cost, not the current market value.
For example, if your couch is a bit worn but would cost $2,000 to replace, use that amount. Many insurers offer online calculators to assist in estimating the replacement cost of your belongings.
Accurately determining these costs is crucial, as underestimating can lead to underinsurance, leaving you vulnerable in the event of a loss. The Insurance Council of New Zealand (ICNZ) emphasizes the importance of ensuring your sum insured reflects the true replacement value to avoid potential shortfalls during claims
Step 3: Use Quashed to compare and get the right coverage
Now that you know how much it would cost to replace your belongings, it’s time to compare policies and find the right coverage.
That’s where Quashed comes in. At Quashed, we make it easy to find the right contents insurance for you. Use Quashed to compare contents insurance policies from different providers.
Tailoring coverage to your unique situation is simple—whether you need higher coverage for expensive gadgets or a standard plan that fits your budget, Quashed makes the comparison process quick and hassle-free.
Ready to protect your belongings? Explore our 'Further Reading' section below.
Step 4: Keep your sum insured updated
It’s tempting to set your sum insured once and forget about it. Here’s the thing: life changes, and so do your belongings.
Have you bought a new sofa, upgraded your kitchen appliances, or added bikes for the family? If your contents grow over time, you’ll need to update your coverage accordingly.
Step 5: Balance coverage and cost
While keeping your sum insured updated is crucial, it's also important to strike the right balance between coverage and cost. Consumer NZ highlights that premium costs have been rising significantly, with house insurance premiums increasing by 97% over the last decade. Regularly reviewing your policy ensures it aligns with your current circumstances and adequately covers your assets without overpaying on premiums.
Finding the right balance is key. You want to make sure your most valuable items are properly covered without overspending. Quashed allows you to tailor your coverage by comparing different policies, so you can make sure you’re getting the best bang for your buck.
Looking for more info? Check out our 'Further Reading' section below.
Why your contents insurance might need a second look
Finding the right balance between coverage and cost isn’t just about saving money—it’s about ensuring you’re properly protected.
When it comes to contents insurance, there’s no one-size-fits-all. The amount you should insure depends on your personal situation and the value of your belongings. Getting the sum insured wrong could leave you underinsured with a big gap in coverage or overpaying for unnecessary insurance. That’s why it’s important to take a few minutes each year to review your contents insurance.
Not sure if your sum insured is right? Compare policies with Quashed and find the right balance today
Hypothetical case study: Sarah’s steps to setting the right sum insured
Let’s take a look at how Sarah, a busy professional in Auckland, applied these steps to ensure her contents insurance matches her needs.
Sarah, a 38-year-old professional living in Auckland, recently moved into a new apartment. She's got a couple of young kids, a new job, and a growing collection of tech gadgets, including a brand-new laptop, smartphone, and tablet. Sarah wants to make sure everything is properly insured, so she decides to review her contents insurance.
Step 1: Inventory of belongings
Sarah spends an afternoon going through her apartment and listing all the valuable items.
Electronics: Laptop ($2,000), smartphone ($1,000), tablet ($800)
Furniture: Sofa, dining table, bunk beds
Kitchen items: Fridge, microwave, washing machine
Valuables: Family heirloom jewellery and some high-end art pieces (valued at approximately $2,000)
Step 2: Estimating replacement costs
Sarah adds up the replacement costs for everything she wants insured—based on current market prices, the total is $15,000. After checking online prices for her high-value items, Sarah estimates the total value of her belongings at $17,000.
Step 3: Use Quashed
Sarah then heads to Quashed to compare different contents insurance policies. Using Quashed’s easy-to-use comparison tool, she finds the following options:
Policy 1: $250/year, covering everything with a $500 excess (amount paid before claims).
Policy 2: $280/year, includes accidental damage but with a higher excess of $1,000.
Policy 3: $230/year, only covers standard items with a lower excess.
After reviewing her needs and preferences, Sarah chooses Policy 2, as it offers full coverage (including accidental damage) for only $30 more annually.
Step 4: Regular review
Sarah sets a reminder to review her contents insurance every year. She’ll update her sum insured if she buys new tech or furniture and will also keep an eye on changing values as her kids’ belongings grow.
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Further reading
Here are some useful reads:
Complete Guide to Contents Insurance: Learn the essentials of protecting your belongings.
How to Lower Your Contents Insurance Premium: Smart ways to cut costs without losing cover.
How Much Does Contents Insurance Cost? : Key factors that affect your premium.
Contents Insurance Tips for Kiwi Seniors: Helpful info tailored for older Kiwis.
Is Contents Insurance Worth It for Renters?: Should renters get insured?
FAQs
What is the sum insured for contents insurance?
The sum insured is the maximum amount your insurer will pay to replace your belongings if they are lost, stolen, or damaged. Setting the right sum insured ensures you have enough cover without overpaying on premiums.
Your sum insured should reflect the full replacement value of your belongings, not their second-hand or depreciated value. Underinsuring can leave you short when making a claim, while overinsuring means you might pay more than necessary.
How do I calculate my sum insured for contents insurance?
To calculate your sum insured, list all your belongings, estimate their replacement costs, and use an online contents insurance calculator for accuracy.
Start by taking an inventory of key items like electronics, furniture, clothing, and jewellery. Use receipts or online price estimates to determine their replacement costs. Many insurers offer tools to help estimate the correct amount.
What happens if my sum insured is too low?
If your sum insured is too low, your insurance payout may not fully cover the cost of replacing your belongings, leaving you to pay the difference.
Underinsuring means that if you need to claim, you may not receive enough to replace everything you own with like-for-like items. It’s like budgeting for groceries but not having enough at checkout to cover all your essentials.
How often should I update my sum insured?
Review your sum insured annually or whenever you make a major purchase to ensure it accurately reflects what you own.
New purchases, inflation, and lifestyle changes can all impact your coverage needs. If you buy expensive furniture, electronics, or jewellery, update your policy to avoid being underinsured.
Can I adjust my sum insured to lower my premiums?
Yes, but reducing your sum insured too much can leave you underinsured, meaning your payout may not cover full replacement costs in a claim.
If you want to lower your premiums, ensure your sum insured reflects true replacement value rather than unnecessary overestimation. A higher excess can also help reduce your premium while keeping coverage intact.
Are there tools available to help calculate my sum insured?
Yes, many insurers offer online calculators to estimate the correct sum insured based on your belongings and replacement costs.
These tools help prevent underinsurance by ensuring your sum insured matches the cost of replacing your possessions today. Some calculators allow you to input specific items, while others provide estimates based on household size.
This article provides general information only and does not constitute insurance or financial advice. Insurance policies vary between providers, and you should check with your insurer or a licensed adviser for guidance specific to your situation. For full details, refer to Quashed’s terms and conditions.
