All About Contents Coverage
We know the importance of protecting your assets in the event of loss or damage—your car, your home, even your cottage. But what about the stuff you own? You might be aware of your home’s building value, but the value of your contents can be devastating in the event of a loss.
Why do you need contents coverage, and how do you calculate their value? Over the years, your personal property adds up, and we want to make sure you’re covered.
Taking Inventory Of Your Belongings
In many circumstances, your residential policy will have a minimum contents limit. For homeowner’s, condo, and tenant’s insurance, you’ll want to be sure the limit you set actually covers you. It might feel near-impossible to recall everything you own, but taking an inventory along the way can certainly help. Use this list to start, and add to it along the way:
- Furniture & Bedding
- Computers & Tech
- Clothes & Linens
- Jewelry
- Appliances & Kitchenware
- Medical supplies
Related: All About High Value Home Insurance
Calculating Value: Actual Cash Value vs Replacement Cost
Once you have an idea of the number of things you own, think about the value of your contents. For example, your solid oak coffee table might have been passed down from a family member—meaning you paid nothing for it. You might be a thrift shopper, searching for deals and only making the purchase when the price feels right.
The value of your contents should be thought about in terms of today’s prices, not necessarily what you paid for them at the time. This is where Actual Cash Value and Replacement Cost coverage come in:
- Replacement Cost reimburses you for the cost of replacing the item with a similar type and quality at the time of the loss
- Actual Cash Value takes into consideration depreciation of the damaged item, meaning you will most often receive only a percentage of its value today
Calculate the cost of replacing your items, and check with your broker that your contents are covered under replacement cost or “new for old” cover.
Check Your Limits & Exclusions
When setting up or changing your residential insurance, always check the limits and exclusions of your policy. Most policies have limits on how much you can claim for certain items, like jewelry, bicycles, art and business equipment in the home. You might be an avid art collector; the value of the art you own may be higher than the limit in your policy. Let your broker know, so they can add or amend coverage.
Typically, these policies cover loss or damage by insured perils like fire, theft and vandalism. It’s worth checking what isn’t covered here, too—you can consider adding extra coverage depending on your concerns.