Contents insurance offers financial cover against loss or damage to one’s personal belongings insured under a policy agreement. It is an optional cover that can be bought as part of a comprehensive home insurance policy or as a separate product. However, with the ever-increasing threats of burglary and fire, buying affordable contents insurance is prudent to mitigate the risk of financial loss.
Contents Insurance: Scope of Coverage
Contents insurance offers cover against loss or damage to movables and immovable items that are not fixed, such as electronics, furniture, clothing and decorative items. The policy covers several perils, including:
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Fire
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Theft
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Vandalism
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Explosions
However, natural disasters, such as earthquake and floods, might not be covered under the policy. This varies among the different insurance companies. Contents insurance also covers legal liability against damage or loss to a third party due to mishandling of the insured contents within the premises.
A standard contents insurance policy offers indemnity plans. Here, the insurance company replaces lost or damaged insured products with another one of similar characteristics. For example, a seven-year-old refrigerator will be replaced with another refrigerator that has been in use for seven years. However, one can always buy a contents insurance policy that provides new-for-old replacement. An individual can also insure household items that s/he carries with him/her and are not placed at home permanently, such as vehicles, mobile phones and laptops.
Not every insurance policy covers jewelry under the standard contents list. Most companies require an individual to buy a separate insurance policy for expensive belongings, such as gold or jewelry.
While buying a contents insurance policy, one has to prepare an inventory of items to be included in the list. For this purpose, an individual should have a clear understanding of all the items that need to be covered under the policy and those that can be excluded. Contact an insurance company’s agent or broker to get information about the coverage.
Filter out items that need insurance cover to build the list. Every essential and costly item should make it to the list. However, more items on the list will mean higher premiums. So, include only the most essential or irreplaceable items in the contents insurance list.