Whether dealing with a home or office, calculating the costs of contents insurance is easy right? All you need to do is add up the projected value of your personal belongings and report that number to the insurance broker? Well no, not exactly. Contents insurance is actually much more complicated than that and it's important you understand the minor details.
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.
Fires, floods, and theft represent the three primary reasons for why household goods are damaged. Also worth mentioning are trees falling on your house or vehicles colliding into your wall. Make sure you check with the insurance company to find out exactly what disasters they do and do not cover.
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 many insurance companies can quickly skip over is whether your prized possessions are covered for replacement value or current market value. You want to have replacement value if you really have key household items that you hold dear to your heart. Yes the premium is much higher, but the coverage you receive in case of damages is much higher.
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.
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.
Fires, floods, and theft represent the three primary reasons for why household goods are damaged. Also worth mentioning are trees falling on your house or vehicles colliding into your wall. Make sure you check with the insurance company to find out exactly what disasters they do and do not cover.
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 many insurance companies can quickly skip over is whether your prized possessions are covered for replacement value or current market value. You want to have replacement value if you really have key household items that you hold dear to your heart. Yes the premium is much higher, but the coverage you receive in case of damages is much higher.
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.
About the Author:
Graham McKenzie is the content Syndication Manager at insurance123.co.zaSouth Africa's leading Household Insurance information portal
