Home Contents Insurance

Home contents insurance is a type of insurance that covers damage to your household belongings. “Household belongings” refers to all movable items in your home. These are your possessions that are not permanently attached to your home; you can think of them as everything you would pack up and take with you if you were to move. Furniture is therefore covered under household contents insurance, but a kitchen is not. Household contents insurance covers all these loose belongings in the event of damage or loss. Often, this damage results from a burglary, vandalism, or fire.

What exactly does home contents insurance cover?

When you buy a home, it’s often recommended that you take out home contents insurance. However, it’s not required. There are good reasons why home contents insurance is a wise choice. For example, it ensures you always have something to fall back on if your home is damaged by fire, water damage, or if a burglary occurs. Here, you can find out exactly what your home contents insurance covers and why it’s so important.

What does home contents insurance cover?

You might be surprised by the number of items and possessions covered by your home contents insurance. For example, your pets are also considered part of your household contents, as are your outdoor belongings, such as a flagpole, patio furniture, and laundry hanging outside. If any of these items are stolen, you can file a claim with your home contents insurance to receive compensation. Solar panels are often covered by home contents insurance as well, because even though they’re attached to your roof, they can be taken with you when you move. All of these items are insured in the event of:

• Flooding;
• Explosion;
• Fire;
• Lightning strike;
• Burglary and robbery;
• Scorching and melting;
• A storm with winds of at least force 7.

So what isn't covered by home contents insurance?

It may seem like home contents insurance covers all damage to your belongings, but this isn’t true. Suppose you caused the damage yourself—for example, by knocking over a piece of art with the vacuum cleaner—in most cases, this won’t be covered. Even if it can be shown that the damage resulted from your failure to perform necessary maintenance, your claim will likely be denied. Solar panels that aren’t properly secured to your roof and are therefore blown off during a minor storm are usually not covered either. In this case, you’ll need to contact the installer. However, you may also lose or damage items outside your home. These aren’t covered unless you’ve taken out“outdoor property insurance.”This isn’t included as standard coverage, so you’ll need to insure it separately.

What is the difference between replacement cost and current market value?

An important factor to consider when taking out home contents insurance is the value at which your belongings are insured. If your belongings are damaged, your home contents insurance entitles you to compensation based on the replacement value, but there are exceptions. When are you paid the replacement value, and when are you paid the current market value?

If your belongings are damaged, you’ll want a payout from your home contents insurance that allows you to replace the damaged or stolen items. When it comes to the payout, it makes a big difference whether the insurer bases the calculation on the current market value or the replacement value. The current market value is the value of an item immediately before the damage occurred.

Most insurers cover your household contents at replacement value (the amount you paid for them at the time), unless the current market value is more than 40 percent lower. This is an important point to keep in mind when purchasing household contents insurance.

Want to get home contents insurance? Calculate your premium!

If you own a home

If you’ve purchased a home, you’ll also need home insurance. This covers all the fixtures and fittings in your home. You can often bundle these home insurance policies—including liability insurance—with a single insurer. This is recommended because it makes things much easier for you if both your personal property and your home are damaged, for example, due to water damage. You’ll only have to contact one insurer, which makes things much easier for you, especially during a difficult time. You can discuss your home insurance policies with the insurer to ensure that you’re covered for everything and that no item or part of your home remains uninsured.

Compare insurance providers

Taking out good home insurance is very important, especially if you own your own home. If you rent, contents insurance is often sufficient, but if you buy a home, you’ll definitely need liability insurance and building insurance. Suppose a roof tile blows off your home and lands on your neighbor’s car—in that case, you can use your liability insurance to cover it. So be sure to compare options and don’t just look at the premium you’ll pay based on the value of your household contents. Also consider other factors, such as the option to bundle all your insurance policies with this insurer, the quality of customer service, the additional options they offer, and the terms and conditions. The goal is to find an insurer that’s affordable but also gives you peace of mind and the confidence that you’re covered for any situation.

Report Changes to Your Household Goods

You now know what your household contents insurance covers. If your household contents change, it’s a good idea to discuss this with your insurer. If you purchase solar panels, for example, it’s up to the insurer to determine whether they’re covered under your household contents policy; if not, you’ll need separate insurance or will have to switch providers. Whether you’re buying a valuable work of art, planning a renovation, having your kitchen remodeled, installing a solar water heater, or getting a hot tub, it’s always wise to go over your new situation with your insurer and compare it to your policy. You may need to make some adjustments to ensure you’re fully covered again for all the situations mentioned above. With good home contents insurance, you can be sure that your belongings are insured and that, in the event of a particularly unpleasant situation, you at least won’t have to worry about how to cover the losses.