Not sure how much to insure your contents for? Use this guide to easily understand what it is, what you can and can’t cover, and how to calculate much you need
Contents insurance. It’s a thing for your things. To begin to get a grasp on it, let’s consider your top three desert island items; the “things” you can’t live without. Maybe your mattress? Your MacBook? That Louis Vuitton Neverfull tote you sold your soul for?
Whether you own your home or rent your dream place, we want you to be proactive about the things you love.
Let’s start with what contents insurance actually is.
Step 1: Understanding what contents insurance is
Strata. Annoying? Yes, but they actually have insurance that covers your building if you own, rent or lease out a unit or apartment. As in, the ceiling, the walls, and common areas. But Strata doesn’t cover your stuff. That’s why it’s suggested to get contents insurance to protect all your belongings not attached to the building.
Contents insurance covers almost all the “things” you have in your home, giving you options to replace or repair belongings if they’re damaged or stolen. While you may not consider all your things to be particularly valuable, when you add up how much your furniture, electronics and clothes cost (yikes!) – if a pipe bursts and your flat floods, or if your valuable possessions are stolen, replacing them will put a big ol’ hole in your soggy pockets.
Step 2: Knowing what contents to cover
Contents insurance can cover anything from damage following fires, earthquakes, and break–ins. There are many policy options out there, but it’s important to keep calm and focus on choosing the best insurance for you. Starting with your basic needs and your budget.
So, it’s time to start working out what level of contents insurance you need:
- You could start by going from room to room and making a list of your possessions
- Try categorising them into artwork, electrical appliances, jewellery, furniture etc
- Then you will be able to determine what it may cost to replace them. Did you know, with Honey we cover your contents for new for old replacement? We cover you for that item’s value the day you bought it.
- When you go through your possessions, take photos and document serial numbers and receipts so you have the details you need when making a claim
Note: There are certain individual items such as valuables, collectibles and media that can have limits on how much they can be covered for. If there’s a crazy–rare vinyl record you’re holding onto for a rainy day, you may want to consider specifying that individual item on your policy.
Think about what items you’d like to be covered for the full replacement value of an item, and be sure to check the Product Disclosure Statement (PDS) for item limits. If required, let your provider know to list it on your policy.
Like to work in your pyjamas? Did you know Honey includes up to $20k worth of cover for today’s home office? You can work in comfort knowing that not only your favourite pyjamas, but your office equipment is also covered.
Going somewhere? As you consider how your items could be protected by contents insurance when they’re IN your home, the better news is Honey offers an optional benefit to cover your stuff when they’re OUT of your home. At an additional cost, Honey also offers optional cover for contents away from home within Australia and New Zealand.
Step 3: Knowing what can’t be covered
This will all depend on the type of insurance you have and your specific policy. Always make sure you take time to read the PDS so you’re not left in the dark on the terms of your cover. For example, some policies may have limits on certain contents items, or may not cover an item at all.
It may be handy to know in these times of data, privacy and hackers; that you cannot be protected if your laptop gets a virus or is hacked; however, if it’s stolen – you might like to know that theft is an insured event under Honey’s contents policy.
What else don’t we cover? You leaving your Zoom camera on between meetings… yep, that’s on you.
Step 4: Calculating how much cover you need
If this is feeling like you need a maths degree, don’t fret. All you have to know is approximately how much your belongings are worth. In 2020, Logic the rapper paid $183,812 for a rare Pokémon card… so, in some cases, it pays to know exactly what you’re sitting on.
Anyway, this will help you determine your “sum insured,” which is the maximum amount your insurer will allocate to replace or repair what you own. This also helps form the basis of your premium – that is, how much you’ll pay for your cover.
Don’t leave any room or cupboard out of the picture! Refer to your PDS to know all the details of contents coverage so you know what you are covered for if something was to happen to them.
Step 5: Calculating how much contents insurance costs
So, how much does contents insurance cost? There are several factors that may come into play beyond your sum insured: where you live, the likelihood of you making a claim, any specific items you add, and the basic excess amount you choose also count towards your premium assessment.
Let’s break it down: a cost to consider is what you’re willing to pay in excess.
So, what is it? The excess is essentially the amount you need to cover on your own before the insurance sets in. Generally, you can lower your premium by choosing to pay a higher excess in the event you need to make a claim.
Then there are the extras you can add to your policy. I.e. Would you like fries with that?
Many of these extras – “benefits” – are already included. Here at Honey we offer an optional benefit of ‘accidental damage and motor burnout’ which can be added to your policy at an additional cost.
Step 6: Remembering what you’ve learned today
- Contents insurance will protect the stuff you can’t live without if they get stolen or damaged. Accidents happen! This type of insurance will ensure you won’t have to fork out to pay for their replacement.
- Read the Product Disclosure Statement (don’t skip this step).
- Once you’ve calculated the cost of things you want to protect, you can determine your sum insured – the maximum amount your insurer will allocate to replace or repair what you own.
- Then you can figure out your excess – the amount you’re willing to pay towards the cost of your claim, before the insurance sets in. Your excess will make even more sense once your premium is determined (the amount you pay for the cover under your policy).
So, ready to start feeling even better about the stuff you love? To see how your needs tally up, check out our current contents insurance and get a quote online in less than a few minutes. We’re aware it’s 2022, and nothing is too convenient.
P.S. If you need more info, or even want to talk to a human about all these weird and wonderful policy rules, give us a buzz on 137 137. Or, you can find out all the answers to your contents insurance questions here.
Don’t forget to read the fine print
Insurance issued by RACQ Insurance Limited ABN 50 009 704 152, AFSL 233 082 and distributed by Honey Insurance Pty Ltd ABN 52 643 672 628, AFSL 528244. Conditions, limits and exclusions apply. This is general advice only and does not take into account your personal objectives, financial situation or needs and may not be right for you. Always read the PDS, any applicable SPDS and TMD available at honeyinsurance.com before making any decision.