Is cheap contents insurance the best option?

Price is often a motivating factor for choosing contents insurance, but the cheapest may not be the best for your circumstances. 

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Why do I really need contents insurance?

Contents insurance is designed to give Kiwis peace of mind should something happen to their belongings.

You may not think you have enough items to insure, but by simply making a list of your property you’ll be surprised at how much it all adds up to. It makes sense that you, like many Kiwis, would want peace of mind should something happen to your belongings. While it’s true that the total loss of a person’s home and all its contents is very rare, it can be devastating to lose everything and be forced to start again from scratch.

What factors should I consider?

It’s important to consider a number of factors other than price when choosing contents insurance, to make sure you find the policy that’s right for you. Although the price of contents insurance is important for many Kiwis, some other important considerations include:

  • What events are covered by your policy 

  • How your claim may be settled (including any limits)

  • How much excess you will need to pay 

  • Whether there are options available to decrease your premium, if this is a concern for you.

While adjusting your Sum Insured may seem like a logical way to reduce your premium, we don’t recommend you do this. AA Insurance has other options available, including a Limited Contents Insurance Policy, should this be a concern for you.

We have a handy calculator available if you would like to work out how much your Sum Insured should be before you get a quote.

What events am I covered for?

Generally, contents insurance policies are designed to cover events which are sudden and accidental, including acts of nature like cyclones, earthquakes, hail and flooding.

Contents insurance policies can also provide cover for legal liability, which means that if you accidentally cause damage to someone else’s property (like dropping a vase in a store, or riding your bike into a parked car), your contents insurance may be able to help. At AA Insurance we will cover you for up to $2 million per event, but each insurer is different so it pays to check what your cover is.

Without contents insurance, you would have to cover any repairs or replace damaged or lost items out of your own pocket.

Different policies can offer different levels of cover in an event, and this can vary from insurer to insurer. Some events may not be covered or may have reduced cover. It is important to consider this when purchasing a policy, to make sure you won’t have any surprises at claim time.

Basis of Settlement

If you need to make a claim, how much you receive can vary depending on your chosen policy. It’s important to understand what will happen at claim time when purchasing a policy, so you can have peace of mind and be satisfied with the outcome.

It’s common for contents insurance policies to have limits for certain items, and it pays to check this. It also pays to check whether you need to adjust any limits or list any items you may need to replace both before you purchase a policy and at each renewal, so you can make sure you’re fully covered. With AA Insurance, you don’t need to list individual items, but you might need to tell us the total combined value for things like jewellery, cameras, bicycles, works of art and business tools. Both levels of our contents insurance have different limits – click here to see our policy documents.

It’s also important to check whether you will receive the full value of the item you are claiming on, or whether the settlement is for the market value. At AA Insurance, if something you own is stolen, lost or damaged beyond repair, we'll replace most items with a new one or with the nearest available equivalent, regardless of what contents insurance policy you have chosen.

While most items will be covered by new for old cover, certain items such as clothing, footwear and cosmetics, or those items which don’t have a suitable replacement item available, will be settled at the market value.

Excess options

An excess is the amount you need to contribute to make a claim. There are different excess options available; depending on what you think is manageable for your budget. Generally, the larger the excess the smaller the premium.

Before you decide on a larger excess, you should work out if you can afford to pay for the replacement of or damage to any lower value items which are less than your excess.

It’s worth noting that if you own your own home, your contents insurance excess can be different from your home insurance excess – it’s really up to you. You can also change your excess at any time. So, if after increasing your excess you later decide to change it back, you have the option to do so.

In addition, if you have your policies with AA Insurance, you can be assured that you will only need to pay one excess if all the damage happens in the same event. This will be the highest applicable excess.

How can I lower the cost of my contents insurance premium?

If you have a lot of belongings but are on a tight budget, then there are a couple of ways you can reduce the cost.

  • Make sure you choose the right product to suit your needs. At AA Insurance, we have two levels of contents cover. Our Contents Insurance Policy is the most comprehensive cover we have available, which covers accidental loss and damage as well as many other events you have no control over. Or we have Limited Contents Insurance Policy which covers you for the hardest to recover from events such as burglary, storm, fire, flood and natural disaster. Compare our contents insurance products here.

  • Check what optional benefits are on your policy and make sure that you are only paying for those that you want or need.

  • Often, the more insurance policies you have with one insurer, the more discount you may be able to accumulate, such as AA Insurance's Multi Policy Discount for customers who have more than one eligible policy. Having your policies with the one insurer can also make claim time less stressful, and if it’s for the one event you may only need to pay one excess. 

  • It’s also worth checking for any other discounts that may be on offer. For example, if you’re an AA Member, you can get exclusive discounts on insurance policies through AA Insurance by simply providing your personal AA Membership number when taking out or renewing eligible policies.

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Contents Calculator

This is a guide to help you calculate the value of your home contents. You can also download our A4 version to print and complete in your own time.

Latest Policy Document

Want to know more about our Contents insurance? Read the full policy document online.