If you’re unsure how different types of home insurance work or are looking to save money due to rising living costs, you might be wondering if contents-only insurance could be a good option for you.
While contents-only home insurance can be a great fit for some,1 others may risk being underinsured if their policy doesn’t suit their personal circumstances.2
A good starting point is to get your head around what exactly contents insurance is – and how it compares to buildings insurance – as well as what it covers, and then consider how this stacks up against your situation and personal needs.
What is contents-only insurance?
Whether it’s belongings that keep your life humming along, such as your fridge and your washing machine, or those that keep you entertained, productive or that hold sentimental value, contents insurance can help protect the things that make your life yours.3
In comparison, Youi’s Home Buildings insurance protects your actual home and other structures at the premises, helping to cover the cost of damage caused by insurable events such as fire, floods and storms.4
“A building policy also typically includes cover for the permanent fixtures and fittings at the home,” says Mervyn Hartley, Youi’s Head of Product for Home and Small Business.
“This can include built-in appliances not considered to be contents, such as ovens, stoves and air conditioning systems.”
What does contents insurance actually cover?
Contents insurance is designed to cover your belongings for loss, damage or theft in a number of different scenarios.3
At Youi, our Contents insurance provides cover against theft, fire and flood, as well as intentional damage, escaping water and burnout of electric motors.5
There are also several optional inclusions you can choose from, including accidental loss or damage cover to protect against loss or damage to your belongings, even if it happens when you’ve taken an item on an adventure away from home.5
Interestingly, only contents insurance often covers fitted carpets, curtains and blinds. This means that if you only have Home Building insurance and these items are damaged or destroyed due to an insurable event, they may not be covered.4
Contents insurance policies can also provide additional covers that go above and beyond your actual belongings. For example, Youi Contents insurance includes cover for the additional costs of temporary accommodation if you can’t live at your place for a short time due to an insured event.4
“To know exactly what’s included, it’s important that you read your Product Disclosure Statement,” says Hartley, “or have a chat with your insurer to understand what a policy does and doesn’t cover.”
Do you need to consider building insurance, contents-only home insurance or both?
When deciding what kind of insurance you need, it’s worth considering your particular circumstances, including whether you own or rent your home. Here are some things to bear in mind.
If you’re renting:
Moneysmart advises that contents-only insurance to protect your belongings is likely all that you’ll require as a renter,6 while insuring the actual house or apartment is typically your landlord’s responsibility.1
If you’re a homeowner:
According to CHOICE, it’s important for homeowners to consider taking out both building and contents insurance.1 Rather than buying separate insurance policies, you can bundle them with a combined policy such as our Buildings and Contents insurance, which provides a few different benefits.
“Particularly when you need to make a claim, it can mean the process is quicker, simpler and less confusing,” says Hartley.
“At Youi, we apply a single excess if you’re claiming on your buildings and contents for the same event, say a storm. If those policies are with two different insurers, you would almost certainly be looking at having to pay two excesses.”
If you’re buying a house:
If you’re buying and getting a mortgage to do so, your lender may require you to take out building insurance as a condition of providing you with the necessary finance.
“Generally with a mortgage, the property is used as collateral,” says Hartley. “As the lender has an interest in the property, they may want to ensure it is protected against events like storm, fire and flood, in the same way you do as the owner of the property.”
If the property you own is in a strata-managed complex:
If your home only constitutes part of a complex, like an apartment, it’s likely that your building is insured through the strata plan. This means contents-only insurance may suit you.1
“Owners of strata properties can check with their body corporate about what insurance they have in place for the building,” explains Hartley.
It’s worth noting that contents policies for strata owners sometimes include additional cover for fixtures and fittings that aren’t typically covered under the body corporate’s building policy.
Hartley says this can include items such as kitchen and bathroom units, floorboards, tiles, solar panels and cooling systems, but make sure you check specific details with your insurer.
If you’re a landlord:
As a landlord, you probably won’t need a dedicated contents insurance policy for your rental property unless it’s fully furnished, but you may need to consider insuring the actual building to protect your investment.1
In addition to cover for most extreme weather events, such as storms and floods, building insurance policies for landlords may also provide some cover for items that you have provided for your tenants.
For example, Youi’s landlord buildings insurance covers your white goods and furniture at the property as standard for up to $10,000 if they’re damaged in an insured event. And, if you lose out on rent because of an insured event, there is cover for this too, for up to 12 months.4
How much is contents-only insurance?
The cost of contents-only insurance – sometimes known as renter’s insurance – depends on a few factors, including how much you insure the belongings you want to protect for.
Hartley notes that to help protect against underinsurance, it’s essential to select a contents sum insured level – the amount it would cost to completely replace your contents – that’s right for you and will enable you to get back on your feet if the worst happens.
“When working out what that might be, it’s important to keep in mind that typically, a contents policy will be new-for-old, which means the insurer will either replace, or pay to replace, an item with a brand-new equivalent,” says Hartley.
How much should you insure your contents for?
Figuring out how much contents insurance you need is a matter of taking stock of your belongings, room by room, and working out how much the things you want to insure would cost to replace based on current prices.3
“You may be surprised how quickly things add up at today’s prices, rather than what you paid for an item,” says Hartley.
“You should also review your sum insured with this in mind when your policy comes up for renewal or if you make any large purchases.”
This can help you avoid underinsuring your contents.7
Instead, calculate the replacement value of your belongings as accurately as you can. A contents calculator, like this Home Contents Sum Insured Calculator, can be helpful. However, having certain items – such as jewellery and works of art – professionally valued regularly could be a good idea; providing this paperwork when you need to make a claim can make things easier.5
It’s also important to know that some items, like jewellery, may need to be individually specified on your insurance policy to make sure they’re covered.5
Will you need to prove you owned what you’re insured for?
If you need to make a claim, you may need to provide proof that you owned the contents you’re claiming for.5 This means it’s vital to keep good records.
“It’s useful if you retain receipts and photos of your contents items, as these can support a claim should you experience a loss,” explains Hartley.
Can you save money on contents insurance?
Hartley says choosing a higher excess usually means you’ll pay lower premiums for your policy.
“And sometimes significantly so,” he adds.
“But don’t forget it also means you’ll pay more excess if you ever need to make a claim. Or, for events where the damage isn’t so great, you may be paying for the replacement out of your own pocket rather than making a claim.
“With Youi, you can select an excess that is right for your circumstances on both your buildings and contents policies, and you can change these at any time to suit you.”
To find out more about Youi’s Home and Contents insurance, consider starting a quote today.
1 Source: CHOICE – How to find the right home and contents insurance policy, October 2023
2 Source: Department of Veterans’ Affairs – Is Your Home At Risk of Underinsurance?, June 2021
3 Source: Moneysmart – Contents insurance
4 Exclusions and limits may apply. See our Home & Contents PDS for full details.
5 Exclusions, limits and additional fees may apply. See our Home & Contents PDS for full details.
6 Source: Moneysmart – Choosing home insurance
7 Source: Moneysmart – Home insurance
