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Home Insurance vs Contents Insurance

How much contents insurance do you need?

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by Team Onlia
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Contents insurance (or personal property insurance) is a staple of any home insurance policy. However, despite being included in homeowners, condo and tenant coverage, the standard limits may not be enough to protect your most valuable belongings.

To properly insure your personal possessions, start by understanding how contents insurance works.

What does contents insurance cover?

At its most basic, contents insurance pays to repair or replace insured items that are damaged or destroyed by a named peril in your policy. These generally include:

  • Fire
  • Smoke
  • Water
  • Electricity
  • Wind
  • Explosion
  • Natural disaster
  • Vandalism
  • Theft
  • Vehicle impact

Standard policies protect you against the big homeowner worries like replacing anything lost in a fire. But it’s important to remember that contents insurance only covers your possessions. If someone breaks into your home, contents coverage pays for any stolen or vandalized belongings, but the window they shattered falls under building insurance.

Possessions aren’t always damaged in such dramatic ways either.

Does contents insurance cover accidental damage?

It depends on your policy. If you accidentally flood the house, then the damage may fall under water coverage. However, if the family dog knocked over a table and broke a vase, it likely won’t be included. You can expand the number of perils you’re protected against by getting a comprehensive homeowners policy that covers anything except listed exclusions. This gives you the most protection against different types of accidents.

What’s considered the contents of my home?

Your personal possessions can include just about anything contained within your home not considered part of the building. This can include:

  • Clothing
  • Electronics
  • Appliances
  • Furniture
  • Jewelry
  • Artwork
  • Collectibles
  • Bicycles and sporting equipment
  • And so on…

Essentially, it covers everything that you’d consider “your stuff,” and even protects your stuff when it’s outside of your home. If, for example, you bring your laptop to school or work every day and it gets stolen, the replacement would fall under contents insurance.

In the event of loss or damage to your personal property, your policy will specify either "Actual cash value" or "Replacement cost.” This determines how much you’ll get to repair or replace your possessions.

Actual cash value takes depreciation into account, so if the item is older, you might get less back than what you originally paid. These policies are less expensive. Replacement cost raises your premium, but allows you to replace your old item with a new one of comparable material.

With this in mind, it’s time to answer your biggest question:

How much contents insurance should I get?

The average value of household contents seems like the right answer, but even the term “contents” can be more complicated.

Contents insurance includes very specific limits compared to other parts of home insurance. Your total coverage won’t be able to go entirely to one type of object. Instead, different categories have different values. You may be covered for $1000 worth of clothing, $3000 for appliances and $5000 for jewelry.

When buying contents insurance, it’s important to compare the limits listed to what you actually own. If you have a lot of electronics but no jewelry, find a policy that favours electronics to protect what matters to you.

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What does home insurance cover in Ontario?

Generally, home insurance in Ontario will include building insurance (or dwelling insurance) for the structure of your home, contents insurance for your possessions and liability coverage to protect you from lawsuits. The different pieces can also be bought separately depending on your needs.

Is content insurance mandatory in Ontario?

Home insurance, including contents coverage, is not mandatory in Ontario. However, it’s highly recommended because having no help replacing everything you own after a fire is unimaginable. Contents insurance can provide financial protection during the hardest times in your life.

Do I need contents insurance as a landlord?

This depends on whether you provide your tenants with furnishing or other amenities. If none of the stuff in your building belongs to you, you may not need contents coverage. But if you outfit your rented rooms with ovens, fridges and wardrobes, or if you have furniture in common spaces and artwork on the walls, all of this is insurable.

How to check if my house is insured

It’s always advisable to read through your policy and confirm what is and isn’t protected. For example, if you’re a frequent flyer, you may want to make sure you have worldwide coverage that extends contents insurance to anywhere.

You can also double check whether you’re over or under insured. If you made any major purchases, or you’ve decided to downsize, your coverage may no longer reflect how much you actually own. One way of measuring is to look at your total price of contents insurance. It should be about $1 for every $1,000 of stuff you’re insuring.

If any of your possessions are worth significantly more than the coverage offered, you may need to add an endorsement to your policy to expand the coverage on a specific category.

How to select home insurance

Find a policy that protects the things that are important to you at a price you feel comfortable with.

Insurance should fit into your life, so your policy should be customizable to your needs. Can you access it directly online? Can you make adjustments without talking to a representative? For a policy you can change as often as your life does, get a quote from Onlia today.

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