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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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What factors should I consider?

It’s important to consider a number of other factors 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, other important factors include:

  • Policy benefits
  • Legal liability cover
  • Ensuring you are adequately insured

These can often save you time and money in the long run, and ensure you can replace your contents with brand new items. There are also ways you can reduce your premium without compromising on these important features. But let’s start with the basics: why do you need contents insurance at all?

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.
  • While it’s true that a 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 if I’m really careful?

You may consider yourself to be very safety conscious and careful with your belongings and therefore not at risk. However, accidents can and do happen, no matter how careful you are. And let’s not forget the damage caused by things beyond your control, such as a storm, flood, burglary or theft. Consider the following:

  • There have been a growing number of weather related catastrophes throughout New Zealand recently - weather related damage is often unforeseen and uncontrollable, and could cost a small fortune to repair or replace damaged belongings.
  • If you lost all your belongings today, would you be able to afford to replace them out of your own pocket? If the answer is no, then it’s the right time to look into contents insurance.
  • What would happen if you were held legally liable for accidentally damaging someone else’s property? If the damage is accidental, such as you damage the kitchen benchtop of your landlord’s property with a hot pot, then you could be required to pay the cost.

It’s worth noting that contents insurance will only cover accidental damage, rather than cases of damage caused by negligence. For example if one of your rotting trees with broken limbs fell onto your neighbour’s roof, it may be considered that you were negligent by not maintaining trees that were potentially dangerous.

Legal Liability

Legal liability is another important reason to have contents insurance.

  • If you damage someone else’s property, and it’s your fault, then you are liable to cover the costs.
  • If you don’t have insurance you are still required to pay the costs, either in one payment or over a period of time.
  • This will happen whether or not the owner of the property has their own insurance. For example, your neighbour’s insurer will cover their damaged roof, but will then look to recover the money from you because the tree that fell through their roof is your responsibility.

Insurance isn’t just about protecting your property; it’s also about protecting you from potential debt and financial difficulty. By taking out insurance, you also have legal liability cover, which means if you are directly, or indirectly, responsible for loss to someone else’s physical property, then your insurer will cover you – up to $1 million if you have contents insurance with AA Insurance. The cover also extends to those within your household, including pets.

However, it’s important to note that legal liability, as part of contents insurance, only covers the policyholder and not their flatmates. With this in mind, if you’re renting with others it’s worthwhile for you to each take out your own contents insurance. This will help each flatmate protect their individual property, as well as themselves from potential debt.

How do I work out how much to insure my contents for?

The simplest way is to walk through every room in the house where you live, including the garage, and list everything you own, then the estimated replacement cost. A few tips:

  • Don’t forget the little things that you may take for granted, like crockery, cutlery and cooking utensils, as they all add up too.
  • If your belongings are located at another house, such as your friend’s, you will need to insure those on a different policy with another insurer. Your contents policy only covers the belongings that you or a family member normally keeps in and around your home.
  • A common mistake is that many students living away from home, who are not at a boarding school or in tertiary accommodation, believe their belongings are insured under their parents’ policy; that isn’t always the case, and it pays to check with the insurer.

At AA Insurance we’ve taken some of the guess work out of calculating your contents for you. Our online contents calculator will help you calculate the value of your contents in your home. We’ve even listed the average costs of regular household items to help you better estimate the cost of your own items.

As no one knows your own property better than you do, it makes sense for you to work out the best replacement value for your belongings. Simply fill in the calculator, add up the totals to find out how much cover you need, then you’re ready to get a quote for your insurance.

It’s the little things that count – specified items

It’s important to note that some items, such as jewellery, bicycles and cameras, have limited cover unless you list them separately on your policy schedule. Check with your insurer what items have limited cover so you can make sure you’re fully covered.

It’s a good idea to keep your receipts too, as well as a photo or video of your items, not just the specified ones, and keep them safely together off-site or away from your home. Should you need to make a claim, these kinds of records are a great way to show your insurer and fast-track the process.

Am I adequately insured?

The best way to ensure you are adequately insured is to:

  • Work out the replacement value of your contents. Go through everything in your house, including your garage and make a list, as outlined above.
  • Keep a note of all new major purchases each year. Maybe you’ve sold a leather couch, or purchased a vintage brooch. A good reminder to do this is when your renewal notice arrives, or when you acquire or sell something.
  • If you move out of home, or your adult child moves out, reassess your contents insurance.
  • Remember that children won’t be covered by their parent’s policy if they move out of home, unless you are temporarily residing in accommodation provided by a tertiary educational institution, which is limited to $5,000.

How can I make my contents insurance cheaper?

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.

  • The first is for you to choose a higher excess, which you’ll only have to pay at claim time.
  • The second is combining your insurances with the same company as you could qualify for a Multi Policy Discount.

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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.

Use our Contents Calculator

Latest Policy Document

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

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