Contents insurance can often be seen as a non-essential luxury, especially if you're renting. But what if the unthinkable happens - a house fire, robbery, flooding - the things you have in your home can add up to tens of thousands of dollars.
It's bad enough that your possessions have been destroyed, damaged or stolen, add to that the financial stress of being uninsured and it's a recipe for complete disaster.
Essential Kids spoke to CHOICE Insurance expert Jodi Bird, who said that a much smaller proportion of renters took out contents insurance, compared to home owners.
He said, "Research for the Insurance Council of Australia in 2015 estimated 31 per cent of renters had contents insurance. While for owners almost 90 per cent had contents insurance."
As for must-have inclusions, Mr Bird nominates the following:
- Portable cover for expensive gear you take out of the house, like laptops and bikes.
- Cover for software, movie and music files if they're stored on a laptop or desktop. It could be worth a lot more than you realise.
- Cover for moving house - unfortunately renters have to do it more often and this is when things are more likely to be damaged or stolen. So look for policies that offer overlapping cover at both your old and new address when you're moving house
There are a number of smaller clauses in contents insurance policies that many people are not aware of, but can add up to a whole lot, financially. Australian consumer advocacy group CHOICE has identified and published a list of them, which we've reproduced for our readers below.
Here are some of the unexpected things your contents policy may cover you for, but ensure you read the inclusions for your particular policy, or the ones you're considering. Some of these apply to renters only, and some apply to both renters and owners.
1. Your stuff when you're not at home...
(even if you go as far as New Zealand)
As well as covering all your prized possessions in the home, contents insurance includes the option to cover items you take with you, like your laptop, bicycle or your diamond ring, wherever you are in Australia (and many policies also extend this to New Zealand). What's included varies between insurers, and you may need to specifically add higher priced items, so check before you buy.
2. ...and when you're overseas
Although it's always a good idea to take out travel insurance, many contents policies will cover your possessions for up to 30 days when you're overseas, too.
3. Things on your lawn or on the front porch
If all your pot plants and your pricey outdoor furniture were damaged in a storm, for example, or someone walks off with your lawnmower (even if it's in an unlockable garden shed), you could be covered by certain policies. Check any restrictions with each insurer.
4. Your treasured library of music and movies
Anxious about your backlog of Game of Thrones episodes? Rest easy. Many contents policies will cover you for software, music, movies and other media that you've downloaded legally or installed from a CD/DVD and can't replace if your laptop is stolen from your home or lost in a fire.
5. Vet bills
If your furry friend is hit by a car, gets an illness or is injured in a vehicle accident or an insurable event like a fire, some insurers will cover the associated vet bills. Keep in mind, it's much less cover than you'll get with a separate pet insurance policy.
6. Your guest's stuff
Your mate comes to stay and your house gets robbed, along with all their stuff. Awkward. Luckily, many policies cover visitors' contents usually up to around a few hundred dollars.
7. Food spoilage
If you have a freezer full of meat from the posh butcher down the road, and it all goes to waste when your fridge carks it as the result of a motor burnout or something like a power outage during a storm, many policies will cover the cost up to a certain amount.
8. Moving house
Things can get broken or damaged when you move from A to B, so many policies offer overlapping cover at both your old and new address for around two weeks when you're moving house, and also for when items are in transit. Some policies may also cover items placed in storage – check policy conditions with insurers.
9. Moving house because of an insured event
If you have to move because of a flood or fire or other insured event, your insurance will stump up any extra rent you have to pay to rent a comparable home. You'll usually be able to claim for either 12 months or up to a percentage of the amount you're insured for.
10. Accidents that may or may not have been your fault (your legal liability)
Accidents do happen – perhaps there was a cooking incident that caused a kitchen fire, or your washing machine overflowed and ruined the floorboards in your rental property.
Your landlord has insurance to protect their building, but you could be liable for damage that your bond won't cover. In cases like this, contents insurance that includes cover for legal liability could come in very handy. As always, check for restrictions before you buy.
Policies for renters vs owners
We also asked Mr Bird about what key differences there are in policies for renters vs home owners.
- Some policies have less cover for temporary accommodation for renters. For example, if your rent is $300 a week and the cost of equivalent temporary accommodation is $350, the insurer might only pay the difference of $50, and you still have to stump up the rent. While owners could claim the full $350.
- A couple of policies will only cover temporary accommodation up until the end of the renters existing lease instead of, for example, 12 months.
- On the other hand, legal liability is useful for renters. Something like water spilling from a washing machine would be covered under accidental damage on an owners policy, but in a rental property the landlord would claim it on their own insurance policy, and then the landlords insurer may pursue the renter for the costs. So if the renter has insurance they can use their legal liability cover.