If you own your own house, then building and contents insurance is a no brainer. But if the building you live in is already insured by your strata or your landlord, should you get contents insurance to cover your own belongings?
Here's our guide to contents insurance, including what to look for, what you can get cover for, and how much you can expect to pay, and the side benefits to having contents insurance that may surprise you.
On this page:
- Do you need contents insurance?
- What does contents insurance cover?
- How much does contents insurance cost?
- Contents insurance for strata owners
- Contents insurance for renters
- Cover for your legal liability
- Insuring contents away from home
- Insuring individual items
- Additional features
Do you need contents insurance?
If you rent or if you live in a strata property, building insurance will be covered by your landlord or strata corporation. But you'll still need your own contents insurance to protect your belongings against things like fire, flood and theft.
It's easy to underestimate the value of your items around the home simply because you didn't break the bank to buy a pair of jeans or a toaster. But over time, the total value of your possessions is likely to add up to more than you can afford to replace in one hit.
What does contents insurance cover?
Contents insurance will cover just about anything in your house that isn't bolted down. That includes the kettle, the curtains and the couch – but not the cat or the car or the contents of the pantry. Every policy document will have a section on what is and is not defined as contents.
Contents insurance also usually covers a few other costs, such as temporary accommodation if you can't stay in your home after an insured event.
High-value items
Most insurers will have limits for how much you can claim for certain high-value items such as jewellery, watches or artworks.
If your record collection, for example, is worth more than the insurer's default limit, you have the option to get its value specifically listed on your policy, which will increase your premium.
Insured events
Contents insurance covers the cost of repairing or replacing the belongings you keep at home if they're damaged or lost in one of the "insured events" covered by your policy.
When you buy a policy you tell the insurer how much it will cost to replace all your belongings – this is called your "sum insured". This is the maximum they'll pay if you lose everything.
All insurers cover the same basic list of events, although each has its own definitions, restrictions and exclusions. The list of insured events should include:
- fire and explosion
- flood (sometimes optional)
- storm and rainwater
- lightning
- accidental breakage of glass, ceramics etc
- earthquake and tsunami
- theft and attempted theft
- vandalism and malicious damage
- impact damage (e.g. falling trees)
- sudden escape of liquid (e.g. burst pipes)
- accidental loss or damage (this is usually optional, or included with top tier products only).
Damage caused by pets usually isn't covered, and if it is there might be exclusions for scratching and biting. Same goes for wild animals – such as a rodent chewing on your laptop's power lead.
How much does contents insurance cost?
The average annual premium in Australia for contents insurance ranges from $315 in the Australian Capital Territory to $3776 in North Queensland.
Your premium will depend on factors including where you live and the type of property you live in, the security features on your home, the amount you insure your belongings for, and your insurance claims history.
Prices vary a lot from insurer to insurer, so shop around
Prices vary a lot from insurer to insurer, so shop around. You can reduce your premium by taking out a higher excess (this is the amount you pay to make a claim – the default is usually around $750).
Convincing your landlord to secure the property can also help, such as putting deadbolts and keyed locks on all external doors and windows.
Contents insurance for strata owners
If you own your home in a strata scheme, your body corporate already has insurance to cover the building, but not the items in your home. You need strata contents insurance to protect your belongings.
Strata contents insurance will cover belongings that aren't fixed, but you'll need to check the fine print of your policy to understand if it covers your belongings that are fixed.
Our contents insurance comparison will help you find out at a glance what fixed items might be covered or excluded, such as floating floorboards or carpets.
There are a few tricks to contents insurance for strata property to get your head around. For example, building and contents insurance usually defines dishwashers and ovens as part of the building, but will include them in a contents insurance policy for strata customers.
Before you buy insurance, go through the product disclosure statement (PDS) and check off your belongings on the list of things defined as "contents". Ask about anything that seems to be missing – you don't want to be caught with an insurance gap.
If you own a freestanding house, there's nothing stopping you from buying building insurance from one provider and contents insurance from another. This can be a good way to get cover that suits your particular needs. Bear in mind that you might end up with an insurance gap this way, and you'll have to pay two excesses if you make a claim. You may also miss out on any potential discounts for combining your cover.
Contents insurance for renters
If you rent, you'll want to protect the items you keep in your home. Renter's insurance won't cover damage to the building, that's the landlord's job, renter's insurance will cover the cost of what you own.
The terms "renter's insurance" and "contents insurance" are generally interchangeable. There are a few policies called renter's insurance that offer lower benefits and don't let you set your own sum insured. They might be cheaper, but if you've got more than $25,000 in belongings they won't suit your needs.
Does contents insurance cover a tenant's accidental damage to a rented home?
Not always. Check your contents insurance policy to see if the legal liability cover protects accidental damage caused by tenants.
Accidents happen: an overflowing washing machine could damage flooring, or cooking oil catches fire and damages the kitchen. Your landlord's insurance protects the building, but the landlord or their insurer might look to recoup their costs from you.
This is where legal liability cover can protect you. All contents insurance policies come with at least $20 million legal liability cover. And some will protect accidental damage caused by tenants.
This pays legal costs and compensation if you damage another person's property or are responsible for their injury or death. Having this cover means the insurer will handle the legal case on your behalf.
Contents insurance for share houses
If you buy a policy with housemates, everyone can choose a sum insured for their belongings and you can divide the premium accordingly.
If you choose a higher excess your premium will be lower – and if you make a claim you can split the excess payment proportionally. But it's worth noting, if someone makes a claim against their portable contents (see 'Insuring contents away from home', later in this article), the premium for everyone will go up the following year.
You have the option of going it alone and just insuring your belongings, or getting a policy to cover the whole household
You have the option of going it alone and just insuring your belongings, or getting a policy to cover the whole household. Each route has its own pros and cons. For starters, some insurers won't cover homes with more than three unrelated people living there.
Regardless of which option you take, everyone in the home needs to be responsible. Can you rely on your housemates to lock up properly? Because you may not be covered for theft if the place isn't secured.
Most policies won't accept a theft claim if the thief enters with the permission of a resident – bad news if your housemate has any friends you don't trust. Some policies also don't cover theft from common areas of a share house unless everyone is named on the policy.
There are pros and cons to sharing contents insurance with housemates.
Cover for your legal liability
Few people intend to incur legal costs in their lifetime, but like flood, fire or theft, you could be hit by legal liability at any time. And the legal liability cover in your contents insurance can protect you from expensive claims.
If you rent, legal liability can pay your costs if your landlord or their insurer sues you (see above – Does contents insurance cover damage to a rented home?)
And the legal liability in contents insurance usually travels with you away from home too. So if you unintentionally crash into a parked car while riding your bike, and the car owner makes a claim for damage to their car, your contents insurance legal liability may cover this.
Insuring contents away from home
Portable contents cover protects you against accidental loss or damage for things like jewellery, laptops and sporting equipment – every insurer will have their list of included or excluded items.
This cover usually comes with limits – for example, $1000 per item and $7500 overall per claim – but you can also list your valuable belongings for higher amounts.
Cover for some portable contents usually comes as an optional extra, although a few premium products include it as standard. Some policies have a set excess for portable contents claims that might be different to your standard excess.
Portable contents are covered anywhere in Australia, and many policies also offer cover in New Zealand. If you travel farther abroad, you'll often be covered for the first 30 days, although cover might be limited to a certain amount, or to certain items such as jewellery and watches.
Insuring individual items
These are called "specified" or "listed" items, and you can have them included on your policy for an additional premium.
With most insurers, listing an item means it's also covered for accidental loss or damage when you're out and about, making it useful for phones, cameras, bikes or jewellery.
There are a couple of reasons you might want to list an item:
- You want the item to be covered away from home, but don't want portable contents cover for other things.
- The item's replacement cost is greater than your policy's sublimit for unspecified valuables. For example, many insurers cover unlisted items of jewellery up to a set amount per item and/or overall. If you have a piece that is worth more, you can insure it for its value, separate to this limit.
Additional features
On top of this, most policies will offer additional benefits to help you get back on your feet. Your policy might include cover for some or all of these.
- Underinsurance safety net. If your sum insured isn't high enough to replace all your contents, a few insurers will increase your cover by up to 25%.
- Contents in the open air, like your yard or porch. There are usually limits on how much you can claim, and some insured events might not be covered.
- Electric motor burnout, in case your washing machine or fridge carks it. Some policies also offer a few hundred dollars to replace spoiled food and medications if your fridge or freezer dies.
- Cover while moving house, with a few weeks' overlapping cover at your new and old addresses, as well as some cover while your things are in transit.
- Visitors' contents, usually up to a few hundred dollars.
- Vet bills, usually only if your pet is injured in a car accident or insured event, but some policies cover illness as well. The amount you can claim is much less than what a separate pet insurance policy covers.
- Temporary accommodation if you can't live in your home after an insured event. For renters, this usually covers the additional rent you have to pay to move into a similar place.
Stock images: Getty, unless otherwise stated.
