Buildings and Contents Insurance (2024)

FAQs

How much should you cover for contents insurance? ›

When taking out contents insurance, you'll need to provide the cost of the possessions inside your house. To do this, you should add up the value of all your contents. This includes furniture, appliances, electronics, clothing and anything else you would take with you if you moved house.

Do I need buildings insurance? If you have a mortgage or own a leasehold home, you're usually required to have buildings insurance. Contents insurance is optional but a good idea. Even if your home is mortgage-free, having both buildings and contents is wise.

It is a good idea to take out home contents insurance to cover your possessions against fire, theft and other risks, such as accidental damage. If something happens to destroy or damage your possessions, it can cost a lot of money to replace these items.

The sum of the value of all your items is how much coverage you need. Often, the amount of personal property coverage is determined by using 50% of your dwelling coverage limit. For example, if your dwelling coverage is $400,000, you'll have $200,000 in personal property coverage.

When it comes to insuring your home, the 80% rule is an important guideline to keep in mind. This rule suggests you should insure your home for at least 80% of its total replacement cost to avoid penalties for being underinsured.

If you get it wrong and your home is burgled, or possessions ruined by flooding, for example, you could be left seriously out of pocket. The Association of British Insurers estimates that the average 3-bedroom family home contains items worth a total of £55,000.

Termites and insect damage, bird or rodent damage, rust, rot, mold, and general wear and tear are not covered. Damage caused by smog or smoke from industrial or agricultural operations is also not covered. If something is poorly made or has a hidden defect, this is generally excluded and won't be covered.

Contents insurance & water leaks

The cover for contents is usually similar in that it provides cover for damage caused to your home contents such as furniture and carpets by water leaking from any fixed tank, appliance or pipe.

While accidental damage insurance is not a legal requirement, it is certainly worth considering. If damage is accidentally caused to the building by tenants, the landlord is responsible for paying for any repairs needed.

Is my washing machine covered in contents insurance? ›

Your contents cover does include kitchen appliances that are free standing, such as washing machines. But if your appliance is built in, it will be covered under your buildings insurance. There's no cover for your washing machine if it breaks down.

Contents insurance covers the cost of replacing or repairing your possessions if they are damaged, destroyed or stolen. It includes everything you would take with you if you moved home including your furniture, kitchen appliances, curtains, bedding, clothing, television, computing equipment and jewellery.

Most homeowners insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available and, increasingly, it is recommended that homeowners consider purchasing at least $300,000 to $500,000 worth of liability coverage.

When buying homeowners insurance, property owners must decide on their policy limits. In most cases, it makes sense to buy a policy that provides coverage for the full replacement value of the house. That's what it would cost to rebuild.

The easiest way to calculate the replacement cost is to estimate the local cost per square foot to build a home by your home's square footage. So, if your local contractors charge an average of $150 per square foot, and your home is 2,000 square feet, the RCV for your home would be $300,000 (150 x 2,000 = 300,000).

Making a claim for freezer contents

Before you make a claim, check how much your excess is as this will be deducted from your payout. Unless the remaining amount would be enough to help replace the food, it's probably not worth making a claim as it can increase your premiums in the future.

What is the rule of thumb for calculating life insurance? Multiplying your income by 10 is a good place to begin calculating your life insurance needs, though this rule of thumb doesn't work for everyone. Consult a financial advisor if you want help determining how much life insurance coverage you need.

Most contents policies will have a standard excess of $250, and many home policies will have a standard excess of $400. That's why it's important to review your policy documents and check what your excess is. Voluntary excess - a voluntary excess is where you can choose a higher excess for a lower premium.