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.
Natural disasters like fires, floods, and wind damage account for a lot of personal damage found at homes. Also theft is a primary cause for damaged or stolen goods. Make sure your policy covers all of the above. Always read the fine print, because no matter how unique of a type of situation, there is always a chance it will not be covered.
Learn about other factors that fluctuate your house contents insurance costs, such as location of property, security systems, how often it’s attended, and history of previous claims. Most insurance companies allow you to tag on “add ons” which guarantee the coverage of minute details such as covering goods inside sheds and garages.
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.
Always take the sensible approach when calculating contents insurance. Break down and cross section the value of goods losing money or in bad shape. Compare that to the amount and value of goods that are worth a lot. Do your sums accordingly.
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.
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