How Much Contents Insurance Do I Need?

What is contents insurance and what does it cover?

Contents insurance provides cover for your possessions, should they become lost, stolen or damaged. It usually covers everything from your furniture and appliances to your clothing, cutlery, and everything between.

While contents insurance is commonly bundled together with home insurance, it is not only for homeowners. It’s a good idea for renters to insure their possessions, too. For while renters are typically covered against burning down their house (through their landlord’s insurance), their possessions are their own responsibility.

What types of contents insurance are there?

There are two types of cover typically offered, with many policies offering a mixture of both cover types.

Replacement value

Sometimes referred to as new for old, this replaces your items at their retail value. So, even if your TV is a few years old, it will be replaced with a brand new one of equal value. If you lose a 32″ smart TV, you’ll get a new 32″ smart TV.

Indemnity value

This can go by a few different names, such as market value or present value cover. This type of insurance only covers you for what the item was worth at the time it was lost, stolen or damaged. It factors in the retail value minus the depreciation of the item along with any wear and tear.

Typically this is offered on items that have shorter life spans, or are more prone to wear and tear, such as clothing, bedding and certain sports equipment.

→Related article: Water & Flood Damage: What Does Insurance Cover?

How much contents insurance do I need?

When going through your contents, it’s easy to check off your big-ticket items. But alongside your TV, fridge, bed, espresso machine, dining table and all things expensive, it’s important to sweat the small stuff.

When you add up your towels, sweaters, plates and bowls, an electric pepper grinder, some wine glasses, sunglasses and an ornament or two, the costs can quickly climb.

Make sure you’re not undervaluing your contents.

Calculating how much contents insurance you need

First, it’s important to take note of all your contents. This can be time consuming, and you’ll need to go room-to-room taking note of everything, but it’s important to know what you have to cover. At the same time, it pays to take photos. For, should you lose your possessions, being able to provide some evidence of what’s been lost will make the process a lot smoother.

Once you have an idea of what you have, you need to work out the total value needed to replace them. This is the important part. You don’t want to be covered for the cost of your TV, you want to be covered for the cost of replacing your TV.

Contents insurance providers have calculators on their websites that can help. These will quickly provide you with lists of typical household items, and average values. But it’s important to edit the calculations in order to reflect your own situation. So ensure you go through the list provided, adding and editing the contents and their values to best match your own list.

Once finished, you’ll have a total estimated value. This can then be used to help set your sum insured.

Sum insured

The sum insured is the max possible amount you can claim on your contents insurance. Should you lose all your possessions, your sum insured will be the max amount you are able to claim from your insurer. If replacing all your items costs more than this amount, you will have to make up the shortfall yourself. So make sure you set it high enough.

It’s worth noting that if you lose all your possessions, you won’t simply be given the sum insured amount. Your insurer will only pay what is required. So if they can replace all your contents for less than the sum insured, they will. For this reason, it’s also important not to over insure. As you’ll be paying higher premiums for insurance that you won’t be able to use.

Always review your insurance

A common mistake people make is setting and forgetting their contents insurance. Calculating it can be a timely process, and if we can avoid doing it we tend to. But every time you buy something new, or replace an old item with a newer, better one, the value of your contents grows. So it’s important you update your contents insurance to match.

Furthermore, with every year costs get higher. So even if you haven’t added anything new to your home, your replacement costs may have grown. The amount needed to replace your TV a few years ago may not be the same as it is now.

How does contents insurance work?

When making a claim, you will need to compile a list of everything that has been damaged or lost and the value of those items. The more evidence you have, the better. So receipts, photos and any other evidence that can help prove ownership and value can make the process a lot easier. If you don’t have any evidence, it’s not necessarily the end of the world. But, it can certainly make the process harder, and it can impact your claim.

For example, an empty TV stand and a Sky box plugged into nothing is a pretty good sign your TV was stolen. But, if you have no evidence as to the make and model of your TV, you may find your top-of-the-line set is replaced with a more basic model.

Once your insurer has approved your claim, your insurer will either repair the damaged items, replace them, or give you a cash payout.

About the author of this page

This report was written by Canstar Content Producer, Andrew Broadley. Andrew is an experienced writer with a wide range of industry experience. Starting out, he cut his teeth working as a writer for print and online magazines, and he has worked in both journalism and editorial roles. His content has covered lifestyle and culture, marketing and, more recently, finance for Canstar.