Contents Insurance: What Is It and Why Do I Need It?

Joshua Chadwick By Joshua Chadwick March 11th

You are moving into a new house, that is exciting! While your stay may only be temporary, you should feel as comfortable and safe as possible.  

As a renter in Australia, you may not have to be concerned about protecting the house to ensure the home is insured (that’s your landlord’s job). What about all of your possessions? It might be time to look at an insurance policy to protect the valuable items in your home…the home contents!  

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What Is Contents Insurance? 

As the name suggests, contents insurance is the insurance policy you take to cover the personal belongings (the home contents) inside & outside the home if they’re damaged, lost, stolen, or harmed in any other insured event. Even if the four walls surrounding you do not belong to you, and you live in a rental property, you have plenty of personal belongings that you no doubt hold near and dear that can be protected with contents cover.  

Therefore, it’s a good idea to consider an insurance policy to protect those items. Your landlord will most likely have home insurance, building insurance, or landlord insurance but renters too often forget to consider protecting their valuable items for loss or damage from theft & fire with contents insurance (also referred to as renters insurance.

Some tenants may feel as though contents may not be worth it as their possessions may not hold many valuable items in their rental property, but if you go through all of your items the replacement costs may be worth more than first thought, and replacing them can be a nightmare! (we’re talking about those pesky electric motors and electrical appliances.)  

A good idea is to create an inventory of all of your items and tally up their worth. Then ask yourself if you are in a good financial situation to replace them in the worst-case scenario. If the answer is no, it might be a good idea to get contents insurance. 

Types of Contents Insurance 

There are actually two different types of contents insurance policies, which differentiate if your items are truly needed or they’re important purely from a monetary point of view.  

One form of contents insurance puts preference on the value of your belongings and will assess depreciation of said items to determine a return amount for their loss. In this case, you may be receiving less money back from the insurer for the item than you expected from a claimable incident. 

A different case of contents insurance focuses on a more new-for-old policy, in which your belongings are fully covered for replacement and could even be higher value than the previous item. 

The latter seems too good to be true compared to the former, and thus will typically come at a higher insurance premium compared to the first form of contents insurance, so keep in mind what you can afford before signing up. 

Standard Contents Insurance Covers 

A majority of policies listed by insurers will have definitive events listed in which you are eligible to claim your insurance, with some additional optional covers you can add on for a premium. 

The standard covers most commonly found with insurers are known as defined events, which can range from acts of burglary and theft to fires and storms, and even vandalism. 

Other benefits for standard forms of contents insurance can consist of: 

  • Debris removal from destroyed or damaged contents caused by a defined event 
  • Repairs/protection of the building required to prevent further loss or damage caused by an insured event (break-ins requiring new locks and keys etc.) 
  • Coverage of contents while moving home within Australia, typically for a fortnight. 
  • Temporary accommodation for both yourself and also your pets. This is only covered if your contents were damaged in an insured event to an amount where you cannot occupy your home for the time being. This may also include moving and storage costs 
  • Any spoilage of typically perishable food or medicine to a certain limit 
  • Damage or loss occurring to the personal possessions of guests whilst they are visiting during a defined event, up to a certain limit also. 

Optional Covers  

In addition to protecting your belongings, you may seek to upgrade your level of cover with the following optional extras.  

Flood cover- Thousands of homes around Australia are affected by bushfires and floods every single year. (Quick fact: Did you know that Queensland is the most natural disaster-prone state in Australia). Depending on where you live in Australia, some Australian insurance policies (including car insurance policies) will include flood cover as a standard feature.  

Motor burnout – This optional cover can assist in the repair or replacement of household white goods if the motor of the appliance suddenly dies as a result of a power surge or excessive current.   

Accidental damage cover – Most content insurance policies won’t cover you for accidental mishaps or breakages to glassware, ceramics, or sanitary fixtures. This might be a good idea if you have young children, or if you yourself are particularly clumsy (like me). Your brand-new flat-screen might thank you as it’ll fall under these insurance products. 

Portable items- You can also take out optional cover for the accidental loss or damage of portable items you take out of the home, such as cameras or jewelry.  Portable items with a high value such as mobile phones and sporting equipment will need to be specified separately to cover their replacement value and receive the sum insured.  

Many insurance companies find the right insurance policy that suits your lifestyle and budget can take time and plenty of research. You can also reach out to an insurer, receive a contents insurance quote or a look through their PDS (product disclosure statement), or read up on a financial services guide. 

Contents Insurance Exclusions 

While there is a great sum of inclusions for contents insurance, there are also some exclusions you should be aware of before making your decision, which includes: 

  • Your home building or any permanent fixtures, as they’re only covered under a home insurance policy. 
  • Items lost due to intentional, malicious damage, or criminal acts are not covered as they are listed under your control, as well as any contents acquired illegally. 
  • Contents seized lawfully, either confiscated by the police, government authority, or anyone who is legally allowed to seize your belongings are not covered under an insurance claim. 
  • The wear and tear of your contents are also not covered by contents insurance (for more info on wear and tear, check out our blog here.) 
  • Any inherent defects of your contents, which include poor workmanship, faulty design, or any structural issues of the specific content. 
  • Lack of care and security is also not covered if it’s deemed you did not secure or take care of your contents properly. 
  • Any possessions that have been misplaced and lost that have no identifiable event to account for the loss are also not covered unless you have portable contents insurance, which in some cases there is an exception to this rule. 

To receive a quick and easy quote for contents insurance, click here for full details. 

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Joshua Chadwick
Joshua Chadwick