House insurance and personal possessions insurance are available as separate policies. However, it’s often cheaper to get a combined home and contents insurance package, rather than two separate policies.
This article will help you understand the main features of home and contents insurance packages. We also provide some tips on how to compare different insurers’ policies and find the best one for you. This includes thinking about whether contents insuranceContents Insurance is worth the extra cost.
What does the home insurance cover?
The home part of a home and contents policy covers residential buildings on the property, as well as anything that’s permanently fixed, attached, wired or plumbed to it. This includes things like a garden shed, fences, retaining walls, a swimming pool, a tennis court, built-in wardrobes, an oven and fixed flooring.
Most policies cover damage or loss caused by a fire, flood, earthquake, explosion or storm. They also cover accidental damage, such as broken windows or when a car crashes into your house. Gradual damage and normal wear and tear are not covered.
What does the contents insurance cover?
Contents insurance covers your personal possessions at home or with you anywhere in New Zealand. This includes most things that are not permanently built-in or fixed to your home, such as your plug-in appliances, floor rugs, furniture, kitchenware, artworks, laptops, mobile phones, jewellery, clothing, bikes, garden tools and so on. Items that usually have their own policies – like a car, boat or business-owned equipment – are not included.
Most contents policies cover theft, loss and accidental damage of insured items, including loss or damage at home due to a fire or natural disaster. Some policies won’t cover theft if a door was left unlocked or a window was open. Most won’t cover items stolen by a guest in your home.
How much extra does contents insurance cost?
Market research suggests that, on average, contents insurance adds about 25% extra to a house-only insurance premium when they’re packaged together. However, contents insurance premiums can be quite different from one insurer to another. They also depend on a wide range of things, some of which you can adjust to suit your needs. Here are some examples.
Standard influences on contents insurance premiums
- Your age, address/location and insurance claim history
- Type of home – apartment in a building with swipe card access or standalone house
- Whether you have a boarder or tenant renting part of your home
Variable influences on contents insurance premiums
These are factors that you can normally change to suit your needs or insurance budget.
- Sum insured – an agreed maximum amount the insurer will ever pay out for a claim, even if all your possessions are destroyed
- Item limits – the maximum pay out for a particular type of item, such as jewellery, artworks or electric bikes
- Excess – the amount you agree to contribute towards any claim.
- Adding optional benefits – examples include no excess for broken glass, a lower excess for prescription glasses and no excess for hearing aids
- Annual vs monthly payments – it’s usually 10-20% cheaper to pay annually in advance; if you cancel the policy, the insurer will refund the portion still in credit
Is contents insurance worth having?
Obviously everyone’s situation is different, but here are some things to consider.
What are your possessions worth? Most people underestimate this, so it pays to make a list, assign replacement costs and add it all up. If you don’t own much, live in a low-crime area and have a monitored alarm, the resulting lower premium might still make it worthwhile to have cover.
Could you afford to replace the important items? Highlight the items that are essential and decide whether you could afford to replace them without contents insurance.
What can you afford? Create a budget for the policies you’re considering. But keep in mind that challenging financial times are often when you’d need some level of contents cover the most.
What’s you risk appetite like? If you had little or no contents cover, would you be happy to start again from scratch or would the thought of that keep you awake at night?
How to find the best home and contents policy for you?
Every policy is different and there can be long lists of inclusions and exclusions to wade through. To help you get started, here are a few examples of popular benefits to consider.
- A no-excess payment to change locks after you’re burgled
- Temporary accommodation and storage payments if your home is unliveable after an insured event
- Automatic annual reviews to ensure your sums insured keep pace with inflation
- Cover for legal and mortgage discharge fees, if your house is completely destroyed
- New-for-old rather than current market value cover that might leave you struggling
For many people, the simplest option is to work with a good insurance adviser or broker who represents most of the main insurance companies. They’ll discuss your situation and goals, then explain a few of the best-matching policies for you to choose from. They’re normally paid by the insurer, so there’s no extra charge for you.