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Contents insurance for beginners

3 August 2016

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

So here are five things to consider before putting your hand in your pocket, to make sure you find the insurance cover that’s right for you:

1. Consider the benefits

2. Save yourself from potential financial ruin with legal liability

3. Work out how much to insure

4. Specify items

5. Ensure you’re adequately covered

1. Benefits for you

Let’s start with the benefits of having contents insurance at all. It’s designed to give you peace of mind should something happen to your belongings, because even if you’re really careful you can’t control the outcome of extreme weather, thieves or if someone causes a fire.

If you don’t think you have enough items to insure, make a list of your contents and you’ll be surprised at how much it all adds up to. Would you be able to afford essentials like bedding, crockery and clothing out of your own pocket? How about a house full of belongings, even if most things were second hand?

There is also an optional benefit that may save you money in the long run, Excess-Free Hearing Aid Cover, because we know these things are often damaged.

It’s also worth checking for any discounts, like we offer to AA Insurance customers. Also, the more insurance polices you have with one insurer, the more discount you may be able to accumulate, such as AA Insurance’s multi-policy discount for customers with two or more polices. 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.

2. Legal liability

Legal liability is another important benefit of having contents insurance. Simply put, if you damage someone else’s property, even accidentally, then you could be liable to cover the costs. If you don’t have insurance you’re 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, if you accidentally break a vase in a store, the store owner’s insurer will cover the broken vase, but will then look to recover the money from you because you dropped it.

If you have Contents Insurance with AA Insurance, your legal liability is covered up to $2 million, but the amount differs between insurers so it pays to check. While the cover also extends to those within your household, including pets, if you’re flatting it only covers you, not your flatmates, so make sure everyone has their own contents insurance. Once you’re flatting you’re no longer covered by your parents’ policy.

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

The simplest way to work out how much to insure your contents for 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. And don’t forget the little things often taken for granted, like crockery, cutlery and cooking utensils.

If your belongings are located at another house, such as your friend's, you will need to insure those on a different policy. Your contents policy only covers the belongings that you or a family member normally keeps in and around your home. And don’t forget once you move out of home, you’ll need your own contents insurance.

Our online guide has taken some of the guess work out of calculating the value of your contents for you. We’ve even listed the average costs of regular household items to help get you started. Once you’ve filled in the calculator, add up the totals to find out how much cover you need, then you’re ready to get a quote, which you can also do online.

4. It’s the little things that count – specified items

It’s important to note that some items have limited cover unless you specify them separately on your policy schedule, such as jewellery and artwork. We generally get the most claims for these types of items, so if you have anything particularly valuable it pays to specify it.

It’s a good idea to keep your receipts too, as well as a photo or video of your items, and not just the specified ones. Once you gather these images and receipts together, keep them safely off-site or away from your home. They’ll be helpful if you need to make a claim and fast-track the process.

5. Am I adequately insured?

The best way to work out if you have enough insurance is to start by working out the replacement value of your property, and making a list as mentioned above.

You should also keep a note of all new major purchases, or sales, each year. A good reminder to do this is at the time, or when your renewal notice arrives.

And remember, you won’t be covered by your parents' policy if you move out of home, so this is also a good time to assess your contents insurance.

AA Insurance Limited encourages you to make considered assessments as to the replacement value of specific items, and in particular, for valuable items. Policy excess(es) apply to any insurance claim. Policies are subject to exclusions and conditions. Application for cover is subject to underwriting acceptance. For full policy and benefit terms and conditions see aainsurance.co.nz/terms.html

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