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.
Let’s say that your bedroom erupts into flames and destroys the entire room. First off, you would pray that everyone is okay but after that you would begin to go over the total damage. Little did you know, the insurance broker would force you to fill out two different forms. You would fill out one for damages to permanent or built in appliances, and another for goods that could be moved. Chances are you have little to know permanent fixtures in your bedroom so it’s all defined as “moveable” goods. Is that even covered in your policy? You would be surprised to see how many do not include it.
Keep in mind that fires, floods, wind damage, and theft account for the majority of damages at any given home. You can protect your home sometimes from theft, but natural disasters like fires, floods, and wind are almost impossible to avoid. So make sure they are all covered under your policy.
Where is your property located? Do you own or have active security systems? Has your residence been unattended for an extended period of time? Does the property have a history of claims? All these questions and others you must ask yourself. If you do not know, find out! It’s essential that you take these into regard when gaining contents insurance coverage.
Do you want replacement value or current market value? You more than likely want replacement value because it covers more damages and awards more money back than current market value. Current market value only awards back a value similar to the current market, meanwhile replacement value will replace the total amount or at the very least, the emotional damages.
Do you really own that many prized possessions? If you do, than replacement value and a high premium is necessary. If not, a higher premium is only needed if you really wish for the extended coverage. However current market value can really rip you off, so try to avoid a very cheap rate.
It’s a simple formula. Pay a higher premium and your goods are covered much better than if you pay a low or very cheap premium. If you really want strong protection, you must pay a lot even if the chances of destruction or theft are very low.
Contents insurance does not need to be outrageous because you and your house probably aren’t made of gold. Keep in mind that an average household makes $200,000 a year and spends 3% of that total income towards insurance. Spend your money wisely towards insurance and the coverage will stay as strong as more expensive policies.
Graham McKenzie is the content Syndication Manager at insurance123.co.zaSouth Africa’s leading Household Insurance information portal
Tags: Contents Insurance, finance, Household Insurance, insurance, Property, property insurance