Content Insurance, What’s the Damage?
Contents insurance compensates the policy holder for goods and possessions that are not permanent fixtures of your home. But hold on, this is not always the case despite the common perception that contents insurance is the easiest form of insurance to calculate.
For example, if your kitchen caught on fire and completely destroyed the room, what would happen next? Well, the policy holder would have to fill out two separate claims. The first claim would represent the kitchen units and any other built-in appliances. On the second claim you would list off appliances like a refrigerator or dishwasher. You might be surprised by that fact, but those two appliances are not considered an integral part of the kitchen and can be moved.
Natural disasters like fires, floods, and wind damage account for a lot of personal damage found at homes. Also theft is a primary cause for damaged or stolen goods. Make sure your policy covers all of the above. Always read the fine print, because no matter how unique of a type of situation, there is always a chance it will not be covered.
Insurance companies will also consider “add-ons” which incorporate coverage of insuring goods stored outside the house, such as in a garage. Factors that commonly affect house contents insurance costs are the location of the property, its security systems, whether it is left un-attended for long periods, and history of previous claims among others.
Another area you want to guarantee is covered is the replacement value. This differs from the current market value in those extremely important valuables such as antiques and jewelry will be at least covered at replacement or emotional value if they are unable to be replaced. Expect higher premiums however if you wish to protect these coveted items.
However, current market value is when the insurance company assesses home possessions to current value and not what it was worth five to ten years ago. So if you have possessions which are quite old and you want to protect their worth, make sure you get replacement coverage.
Always take the sensible approach when calculating contents insurance. Break down and cross section the value of goods losing money or in bad shape. Compare that to the amount and value of goods that are worth a lot. Do your sums accordingly.
Unless you have a lot of extremely valuable goods, stay with a fairly low premium. Chances of your home getting destroyed are low and the value of your property might not be that much to begin with. Keep in mind that an average family making over $200,000 pays on average 3% of that number back to insurance companies.
Graham McKenzie is the content Syndication Manager at insurance123.co.zaSouth Africa’s leading Household Insurance information portal