A television is hard to miss.
The contents of a linen cupboard, the collection of small appliances in the kitchen, the tools in the garage and the clothing in a wardrobe usually attract far less attention. Yet together, those everyday belongings can account for a significant portion of your household contents value.
That's why home contents insurance isn't just about protecting a few expensive purchases. It's about understanding what it would cost to replace an entire household.
The challenge with valuing household contents
Replacing a single item is relatively easy to estimate.
Replacing everything in your home is another matter.
Furniture, electronics and appliances are often top of mind, but they are only part of the picture. Clothing, footwear, cookware, bedding, sports equipment, gardening tools and office equipment all contribute to the amount it would take to rebuild your household after a loss.
Because these items are acquired gradually, their combined value is easy to underestimate.
What is contents insurance?
Contents insurance is a type of insurance that helps protect the belongings inside your home against specified risks. Depending on the policy selected, this can include items such as furniture, appliances, electronics, clothing and other personal possessions.
A replacement cost is not a purchase price
When reviewing contents insurance, the relevant question isn't what you paid for an item years ago. It's what it would cost to replace that item today.
A refrigerator purchased five years ago will likely have a different replacement cost today. The same applies to furniture, electronics and many everyday household items.
For this reason, contents insurance is generally based on replacement value rather than original purchase price.
Where underinsurance starts
Underinsurance doesn't only happen when a major possession is left off a list.
It can happen when dozens of smaller items are overlooked.
A few missing appliances. Clothing that hasn't been accounted for. Equipment stored in a spare room. Individually, these omissions may seem minor. Together, they can create a gap between what is insured and what would actually need to be replaced.
What is not covered under home insurance?
Home insurance policies contain specific terms, conditions and exclusions.
For contents insurance, cover may not apply to damage caused by domestic animals to insured property. Valuables belonging to guests are typically not covered. Loss or damage intentionally caused by you, a member of your household, a tenant or a guest may also be excluded.
For buildings insurance, wear and tear, gradual deterioration and damage resulting from a lack of maintenance are generally not covered. Homeowners are responsible for maintaining their property and addressing maintenance issues before they result in damage.
Understanding where contents insurance fits
Home insurance can include both contents insurance and buildings insurance.
While buildings insurance generally covers the permanent structure of a property, including walls, roofs, ceilings, built-in cupboards and other permanent fixtures, contents insurance focuses on the belongings inside it. This distinction is important for both homeowners and renters, as the structure of a rented property may be insured by the owner, while personal belongings remain the tenant's responsibility.
The value of taking stock
A contents insurance quote can often be completed quickly. The part that takes more thought is determining the value of everything inside your home.
Taking stock of your belongings, including the items that don't immediately come to mind, can help you arrive at a more accurate amount insured. And that's where you get something OUT: confidence that your contents cover reflects what would actually need to be replaced if the unexpected happens.