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 the things of yours that are left 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.
