Written byContents insurance is cover for the belongings inside your home, paying to repair or replace items damaged or stolen in an insured event.
Also known as: home contents insurance, renters insurance, tenants contents insurance
Key points
- Contents means movable things such as furniture, clothing, whitegoods and electronics, not the building or its fixtures.
- Building cover and contents cover are separate policies, so renters usually need contents insurance only.
- The sum insured is your figure, not the insurer's, and underestimating it can leave you short at claim time.
- The product disclosure statement sets out exclusions, sub limits on jewellery, and whether flood is included.
- Business gear kept at home, including assets on equipment finance, often needs its own cover.
What contents insurance covers
A contents policy responds to defined events: fire, storm, theft, burst pipes, vandalism and, on most policies, an impact such as a tree through the roof. It pays to repair or replace the items affected, less the excess you chose. Many policies also include a small amount of legal liability cover if a visitor is injured in your home.
You can usually add portable valuables cover for things carried outside the house, such as a laptop, camera or engagement ring. High value single items normally have to be listed separately, because standard policies cap what they will pay for any one article.
How much cover do you need
The honest way to set the sum insured is to walk through each room and price what replacing everything would cost today. Most people badly underestimate, because the total is built from many ordinary items rather than a few expensive ones. Insurers publish calculators that make the exercise quicker.
New for old replacement pays for a new equivalent item, while indemnity cover pays what the old item was worth, so the premium difference reflects a real difference in payout. If you have a home loan, note that lenders require building cover rather than contents, so contents is a decision of your own.
Example
A couple renting in Hobart insure their contents for what they think the flat holds. When a washing machine hose bursts, the claim covers the ruined rug, the lounge and the bookshelf, less a five hundred dollar excess. The laptop was at a cafe and escaped the water, and if it had been damaged or stolen there, only the portable valuables cover they added would have responded. Going through the claim, they realise the sum insured was set years ago and no longer reflects what they own, so they revise it at renewal.
Not to be confused with
- Liability
- contents cover pays for your own belongings; legal liability cover pays for harm to others
Frequently asked questions
What does contents insurance cover?
The belongings inside your home: furniture, appliances, clothing, electronics, tools and similar items, when they are damaged or stolen in an insured event such as fire, storm, burglary or a burst pipe. Most policies also include limited legal liability cover. Exclusions and item limits are set out in the policy documents.
Do renters need contents insurance?
The landlord insures the building, not your possessions, so anything you brought with you is uninsured unless you cover it. For most renters the total value of clothes, furniture and electronics is far higher than expected. It is optional, but replacing everything after a fire or burglary rarely is.
How much contents insurance do I need?
Enough to replace what you own at today's prices. Work room by room and add it up, or use an insurer's calculator as a starting point. Review it after big purchases or a move. If the sum insured is too low, the payout may not cover a full replacement.
Does contents insurance cover accidental damage?
Not always. Many base policies cover listed events only, and accidental damage such as spilling paint on the carpet or dropping a television is an optional extra. Check whether it is included, optional or excluded before you assume you are covered, because it is a common gap.
Is contents insurance the same as home insurance?
No. Home or building insurance covers the structure itself, including permanent fixtures. Contents covers what you would take with you if you moved. Owner occupiers often buy a combined policy that includes both, while renters need contents only and landlords usually need building and landlord cover.
Related terms
Broader term: Insurance
Insurance
Insurance is a contract where you pay a premium and an insurer covers specified losses, such as damage to a financed asset or a lender's loss on default.
Read definitionProduct disclosure statement (PDS)
A product disclosure statement (PDS) is the document a product issuer must give a retail customer before they buy a financial product, setting out its features, risks, fees and costs.
Read definitionLiability
A liability is a legal responsibility to pay money or answer for a loss; in accounting, a present obligation to transfer an economic resource, shown on the balance sheet.
Read definitionHome loan
A home loan is a secured loan used to buy property or fund major home projects, with the lender taking a mortgage over the property as security.
Read definitionFixtures
Fixtures are items attached to land or a building so firmly that they are treated as part of the real property rather than as movable chattels.
Read definitionASIC
ASIC is the Australian Securities and Investments Commission, the regulator for companies, markets, financial services and consumer credit, which licenses providers, keeps public registers and enforces conduct laws.
Read definitionGo deeper
Sources
This article is general information only and is not financial advice.