Knowing what contents insurance is is the first step in understanding what home contents policies cover. Contents insurance, in general, protects household objects belonging to you and your family, as well as athletic equipment and anything not permanently tied to the property.
Some policies may require you to purchase extra coverage for items such as jewellery, cameras, and cell phones. Various categories of customers that purchase contents insurance, such as property investors, tenants, and owner occupiers, have different requirements.
Property investors:
To begin, an investor needs determine whether the building is subject to a strata agreement. If this is the case, knowing what their strata insurance covers is critical.
The contents of the unit or property, such as interior blinds, floating floors, carpets, and the paint inside the unit or property, may not be covered in many situations.
Strata insurance normally only covers the building, communal areas, and shared or common contents, depending on which state the property is located in.
When renting out a home to renters, property investors should get landlord insurance. This sort of insurance is more likely to cover accidental loss or damage to contents.
Damage to objects such as carpets, blinds, curtains, and light fixtures, as well as loss of rent if the property is unable to be inhabited, are all areas of coverage that an investor should look for in their landlord insurance.
Owner occupiers:
An owner occupier’s coverage typically includes more items that need to be covered than a landlord’s or even a tenant’s contents policy.
Larger things such as furniture, furnishings, technology, and high-value items such as jewellery, artwork, and collections are all covered.
Most policies will have higher-value-item coverage restrictions, which will be mentioned in the Product Disclosure Statement (PDS).
If an owner requires a higher level of coverage for a particular item or items, this can be discussed with the insurer.
Coverage for items such as blinds, carpets, light fittings and other items not permanently fixed to the property are also included within the contents insurance for a home owner.
Renters
If an owner needs a higher level of coverage for a specific item or items, the insurer can negotiate it. The contents insurance for a house owner also includes coverage for objects such as blinds, carpets, light fixtures, and other non-permanently installed items.
The most crucial thing for a renter to grasp is that the landlord’s contents insurance will not cover their personal belongings. To be covered for loss or theft, the tenant must have their own contents insurance. It will usually cover the tenant’s stuff for larger items like furniture, but it will frequently neglect items like cooking utensils, appliances, linens, and electrical equipment.
It’s difficult to predict how much it would cost to replace all of these goods if the property was stolen or damaged. Even someone who moves out of their parents’ home would have an average contents value of $15,000, according to the Australian and New Zealand Institute of Insurance & Finance.
The risks covered
The following are some of the common hazards covered by a contents policy:
Theft
When theft is the cause of loss, it’s critical to examine your policy’s limits for valuables like money. Check the PDS for information on whether the theft must be characterised as forced and violent in order for it to be covered. Most insurers will need proof of theft, which will be detailed in the PDS along with any other coverage restrictions and exclusions.
Earthquake
This danger is usually covered by most plans. Again, there could be restrictions in the PDS, such as time constraints on landslides caused by the earthquake (usually 72 hours). It’s also worth noting that claims involving earthquakes are usually subject to an extra excess.
Electric motor burnout
For coverage of motor burnout, there will often be differing limits depending on the insurer and policy type, which are usually tied to limits on the age of the motor. Food spoiling is covered by some insurers if a fridge or freezer’s engine burns out. Your policy’s PDS will detail what is and is not covered under your policy.
Escape of liquid
This is a risk that will be covered differently by each insurer. In certain circumstances, the cost of locating the leak’s source will be covered by the insurer; in others, it will not. Repair or replacement of the faulty part or parts, slow leaks, and showers without sufficient waterproofing are all common exclusions. What is covered under your current or proposed coverage will be outlined in your PDS.
Fire
The burning of visible flames to a thing that was not intended for that function is considered fire. The majority of insurers will deny coverage for bushfires during the first 48 hours of taking out a policy. Sparking, scorching, melting, or where there are no visible flames, as well as the application of heat to any area of the body, are all typical exclusions.
Storm, rainwater and wind
Coverage for storms will typically cover loss or damage caused by strong winds, cyclones, or tornadoes, as well as rain, hail, or snow. It’s critical to double-check your insurer’s and policy’s coverage. Damage to trees, plants, and bushes, as well as damage to retaining walls, are common exclusions.
