Home insurance isn't just for people who own a house. Contents insurance protects your property against things like fire, flood and theft – and offers other benefits as well.
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. None of the policies in our contents insurance reviews have these conditions.
Gardens aren't covered, but potted plants usually are.
The short answer: 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.
Most insurers will have limits for how much you can claim for certain high-value items like 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.
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 their own definitions, restrictions and exclusions. The list of insured events should include:
- fire and explosion
- flood (sometimes optional)
- storm and rainwater
- 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 – think mice chewing on your laptop's power lead.
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.
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.
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.
The average cost of a contents insurance policy is $8 per $1000 sum insured – that is, if you insured your contents for $100,000 you could expect to pay $800 a year.
Your premium will depend on factors like where and in what sort of property you live, security features on your home, the amount you insure your belongings for and your insurance claims history.
You can reduce your premium by taking out a higher excess (the amount you pay to make a claim – the default is usually around $600). Convincing your landlord to secure the property can also help – think deadbolts and keyed locks on all external doors and windows.
All contents insurance policies come with at least $20 million cover to pay legal costs and damages if you damage another person's property or are responsible for their injury or death. This usually covers you for accidental damage you cause to a rented property. Some policies have restrictions, with common limitations including fire, water damage and glass or ceramic breakage.
Accidents happen: an overflowing washing machine could damage flooring, or a kitchen fire might make the place uninhabitable. Your landlord has insurance to protect their building, but what if you're liable for damage that your bond won't cover? Your landlord's insurer might come looking to recoup their costs, which is where it will be handy to have a home insurance policy that covers you.
Legal liability cover in home insurance also protects you away from home. If you accidentally damage someone's property or hurt them while going about your day, your contents insurance will cover you (although you need to keep an eye on the long list of exclusions).
There are pros and cons to sharing contents insurance with housemates.
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 – if you make a claim you can split it evenly. If someone makes a claim against their portable contents, the premium for everyone will go up next year.
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.
Some insurers will let you insure just your own belongings, but this means you'll have to pay the full excess if you need to make a claim. Can you rely on your housemates to lock up properly? Because you won't 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.
If you own your home in a strata scheme, your body corporate already has insurance to cover the building. But if, for instance, your dishwasher was covered because it was an original fixture of the building, that might change if you replace it.
Home 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 purchase insurance go through the product disclosure statement (PDS) and tick your belongings off 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 free-standing house, there's nothing stopping you from purchasing building insurance from one provider and contents insurance from another. This can be a good way to get cover that suits your particular needs, but 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'll also miss out on discounts for combining your cover.