The difference between contents and house insurance
It’s easy to get house insurance and contents insurance muddled up. The easiest way to determine whether an item is covered by house insurance or contents insurance is to consider whether it’s nailed, glued or screwed down, or attached by plumbing or wiring. If it’s fixed to the house, like carpet or a built-in oven, it’s a ‘chattel’ that’s covered by house insurance. If it’s a removable item that could be stolen, it’s covered by contents insurance.
What does a contents policy cover?
Possessions covered by a contents insurance policy include your furniture, removable appliances (not built, wired or plumbed in), kitchen stuff, electronics, jewellery, art, musical instruments and anything else you keep at home. Even your eyewear – prescription spectacles and sunglasses – is probably covered by contents insurance.
When you first take out a contents policy, you’ll usually be asked to create an inventory of your possessions. Many insurers have online tools that make this job a lot easier. As well as capturing a list of all the things you own, these tools help you to work out the value of your stuff.
Once you have contents cover, it’s important to revisit your list annually to ensure your cover is keeping up with new purchases. Here’s a list of things that are typically covered by contents insurance:
- Jewellery, watches, clothing, footwear and cosmetics
- Furniture and furnishings, rugs, lamps, blinds and curtains
- Domestic appliances not permanently plumbed in or wired into your home
- Hearing aids, spectacles and sunglasses
- Computers, laptop computers and tablets, plus associated hardware and software
- Phones, cameras, speakers, sound systems
- Musical instruments and musical equipment
- Tools, gardening equipment, domestic lawn and garden appliances
- Sports equipment, canoes, kayaks, children’s inflatables, surfboards, windsurfers, kiteboards, surf skis and wave skis, paddleboards, golf carts and golf clubs
- Cash, documents and certificates
- Wheelchairs and mobility scooters
- Portable swimming pools, saunas and spa pools
- Works of art (paintings, sculptures etc)
- Remote-controlled models or toys
- Food in your fridge and freezer
- Artificial limbs and dentures
Indemnity or replacement? It’s your choice
When you’re arranging contents cover with an insurance company or through an insurance adviser, you’ll need to decide between replacement cover or indemnity cover.
With replacement cover, your insurer will pay to replace a lost or destroyed item with an equivalent new one. Or they’ll pay to repair the item so it’s as good as new. However, it’s worth noting that items over a certain age may not qualify for replacement cover.
If you choose indemnity cover, your insurer will pay to get things back to the way they were before the loss. Claim settlement is based on the market value of the item at the time of the loss.
What’s not covered by a contents policy?
The best way to understand a contents policy is to read the policy document before you buy. In the wording you’ll always find detail about exclusions. Generally, contents insurance does not cover:
- Animals of any kind
- Boats and watercraft, other than portable non-powered equipment
- Motor vehicles and motorcycles
- Trailers and caravans
- Materials used for earning income (for example, timber if you’re a builder)
- Business equipment, apart from the usual home office equipment
- Business money, whether for profit or not
- Artificial body parts, surgical implants or attachments that are permanently fitted to you
- Loss, damage, liability, claim, cost or expense arising out of a communicable disease
Whose stuff is covered?
Contents insurance is designed to look after possessions that belong to you, your life partner and your children. If you have friends staying and a burglar swipes their watches and jewellery, it’s unlikely their losses will be covered by your contents policy. This rule also applies to flatmates that are living with you.
However if your kids leave home, but don’t take all of their stuff, their belongings stored at your place will probably be covered. Also, some insurers will provide cover for your children’s belongings while they’re attending university, polytechnic or school. They usually need to be living in halls of residence, a school hostel or as a boarder in a private home
What about breakdowns?
Special cover for very valuable items
Did your grandmother leave you some jewellery? Have you got a special watch that’s worth a lot? Do you collect valuable artworks? Or maybe you have a really expensive camera? With all contents insurance policies there are upper limits for claims with certain items, so you might need to specify them in your cover. Before you take out contents cover, ask what the limits are for:
- Jewellery and watches (you should get these valued by a jeweller)
- Antique furniture
- Cameras and camera equipment
- Bicycles, including electric bikes
- Watersport equipment
- Collections (coins, stamps etc)
- Handwoven rugs
What if you work from home?
If you work from home, always or some of the time, it’s important to let your insurance company know. Contents policies do provide cover for people who work from home, but it’s usually only for the office assets you’re using to do the work – a laptop or desktop computer, for example. And there will be a cover limit – typically up to $10,000 for a computer.
If your work at home involves more valuable assets – because you’re something like an engineer, hairdresser or video game developer – it’s likely you’ll need business insurance to protect your equipment.
What about liability protection?
Contents insurance cover usually includes liability protection or legal cover. So if you accidentally damage someone else’s property or cause bodily injury, you’re covered. Imagine smashing something precious in a china shop, riding your electric bike into a pedestrian or reversing over the lawn mower you just borrowed from the neighbour. These are all examples of when liability protection can help. The extent of cover will be explained in the policy wording – usually it’s up to $2million for property and up to $1million for personal injury.
As with most forms of insurance, you can get basic cover or go for a policy with lots of bells and whistles. Here are some of the benefits offered by top-drawer policies:
- Temporary accommodation cover that pays for somewhere to live if the place you’re living in becomes uninhabitable due to a fire or natural disaster.
- Gradual damage cover, so you can claim if mildew or rot causes damage to your stuff and it was caused by an ongoing leak.
- A stress payment if all your belongings are lost in a fire or natural disaster.
- Cover for office furniture and equipment used in connection with working from home.
- Cover if possessions are damaged or destroyed during minor renovations at your house.
- Keys and locks cover if your house keys and/or remote door openers are stolen or copied without your permission.
- Cover for fraudulent use of your credit card if it’s stolen.
Cover when you’re moving house
Most insurers will cover your stuff while you’re moving house, provided you’re shifting to somewhere else in New Zealand. If you’re moving overseas you’ll need a different type of cover. Always phone your insurer before you move house to make sure you’re covered.
If you need to store belongings while you’re between houses or travelling overseas, it’s likely your stuff will be covered. There are limits with storage cover, so read the fine print. Some insurers offer cover for up to six months, while others only provide cover for a few weeks.
Holiday cover while you’re in New Zealand
What does contents cover cost?
The cost of your contents cover will depend on the value of your possessions and where you live. We can’t give you an accurate figure here, but it’s worth shopping around. If the cost of cover worries you, here are some strategies for reducing the price:
- Get indemnity cover instead of replacement cover.
- Choose a higher excess (the amount you contribute to a claim).
- Get a multi-policy discount by having all your insurances with the same company.
What does contents sum insured mean?
It includes everything you would take with you if you moved home including your furniture, kitchen appliances, curtains, bedding, clothing, television, computing equipment and jewellery. It is important that you get your contents sum insured right, as this is the maximum your insurer will pay out if you claim.
Tips for making a claim
The number one tip for keeping a claim stress free is being able to prove you own the item or items you’re claiming for. There are various ways to do this:
- Keep or photograph receipts for big-ticket items.
- Keep bank and credit card statements that show payments for purchases.
- Walk around your home photographing everything you own, then store the images in the cloud.
Ask an expert or adviser
In the insurance world, no question is too dumb. If you’re not sure about something, don’t hesitate to ask an insurance adviser or the customer service team at your insurance company.