If you’ve ever purchased—or simply researched—property insurance, you’ve likely encountered the terms “contents” and “structures” coverage. In a nutshell, “structures” refers to the insured building and other structures, and “contents” refers to what’s inside. But this is insurance—no answer is truly simple. This article explains key differences between the two categories and offers guidance to help you make sure you have the coverage you need.
The Basics of Contents vs. Structure Insurance
Do you know if you’re properly protected with both contents and structure insurance? Or do you just assume that the amount of coverage on the building itself, the structure, includes the right kind and correct amount of insurance on the contents?
Typically, insurance policies calculate contents coverage as a percentage of the dwelling, or structure, coverage limit. This cookie-cutter approach could leave you underinsured; it could also have you paying for additional coverage you don’t need. Learn what each type of coverage protects so you can work with your insurance partner to create a custom policy that meets your unique needs.
Key Differences Between Contents and Structure Insurance
There is a difference between coverage of contents and structure (or dwelling).
Contents includes anything that can be carried away from the building. They are typically personal belongings purchased separately from the building. For instance, furniture, appliances, artwork, electronics and clothing are all contents. For commercial buildings, business equipment such as furniture and office supplies, as well as maintenance equipment, would be considered contents as well.
Structural items, on the other hand, are things that are attached to the apartment or unit. Hardwood or tile flooring, countertops, and other cabinetry are all considered part of the building. This also includes additional structures on the property that may not be attached, such as fencing or outbuildings (like a shed or garage). Make sure your agent is aware of any additional structures on your property. If you add a storage shed or vehicle shelter, for example, even if you only plan to use it temporarily, tell your agent or broker.
Making the Right Choice: Contents or Structure Insurance – or Both
Ultimately, if you have any personal or business items in a commercial property (and presumably you have personal items in your home), you need both.
Let’s start with contents.
When insuring a home, start with an inventory of everything in it. Keep in mind that some items, such as artwork, jewelry, firearms and other high-value items will require separate insurance.
For the items that are covered under your standard policy, make sure you understand the difference between replacement cost and actual cash value coverage. Also, think about the value of everything you own. If your home is filled with high-end furniture, expensive clothes, or pricier possessions, the amount of coverage included in your homeowner’s insurance may not be sufficient. (Yes, you can have those limits raised.)
For commercial property, take inventory of all the contents that belong to the building owner, and assign a dollar amount to determine what the items are worth. Such property may include kitchen appliances, light fixtures, furniture in common areas, maintenance equipment, etc. Review this list of items (and values) with your insurance agent/broker to make sure you have enough insurance coverage (and also make sure you don’t have too much).
The building structure policy should cover the cost for rebuilding the structure. Determine how much it would take to restore the interior (e.g., cabinets, tile, etc.) if it were damaged.
Keep in mind that landlords typically don’t insure property that belongs to tenants. Tenants should be urged or even required to purchase insurance for their belongings and provide proof of that insurance.
Do You Have the Right Coverage? Review Your Existing Policies
Your agent or broker can determine the current value of your building structure or home. Schedule a review to make sure your coverage is up to date and that you have the right amount of coverage for the contents of your building. The agent should also be able to tell you whether any rare or high-value items may require their own insurance riders.
