Contents Insurance - Worthwhile?

CrankyCarrot on 07/01/2019 - 18:27
Last edited 07/01/2019 - 19:32

Edit: Originally thought this was Home and Contents insurance, but it's just contents. (Home covered through Strata/Body Corp.)

I'm sorting out dear ol' dad's financial affairs as he's finding everything "a bit too hard," these days and wondering if it's worth keeping his home and contents insurance.

The premium is about $500 a year and covers up to $75k, but I don't see that he has anything particularly worth insuring. He lives in a unit (owned) and has the tendency to hoard old junk, newspapers, cans etc. Stuff found on the street. The most valuable things he has would be a $1000 laptop and some musical instruments (possibly worth up to $7k according to a cert/letter I found).

The likelihood of these things being maliciously damaged, stolen or affected by fire/water damage seems extremely low to me. Hardly worth paying $500 a year to insure. The money would be better invested in basic repairs around his unit (electrical wiring, bathroom cabinet repair etc) IMO.

I can't for the life of me think of any reason to keep the cover, but just in case I'm missing something, can anyone here make a case for keeping it?

Cheers,

CC

Financial

Comments

  • dylo on 07/01/2019 - 18:42
    +3

    Are they in a financial position to be able to cover themselves if they suffer a partial or total loss of their house/contents?

  • onetwothreefour on 07/01/2019 - 18:46
    +6

    Is $500 a year really that much to spend to feel safe in case if the worst was to happen?

    • [Deactivated] on 07/01/2019 - 21:25

      Just out of curiosity, how long have you had yours and how many claims have you made?

      • onetwothreefour on 07/01/2019 - 22:26
        +1

        Will be signing up for my 3rd year soon and no claims yet. But my situation is a bit different to the OP, if my house burns down I'll still owe 300k+ to the banks so I'm not taking that risk. They have also updated the OP since my comment, their home is covered by the building insurance so maybe not as important to cover just the contents if you don't own much.

  • barbarella on 07/01/2019 - 18:52
    +1

    Does he pay Strata/Body Corp?? If so, the fees he pays would cover the external building if it burnt down but not the internal.
    The contents insurance should be set up to pay for any internal damage that might occur (eg. fire, flood, water damage), as well as his personal possesions. Hope that helps. Ensure that he has the RIGHT coverage.

  • kizashi on 07/01/2019 - 19:03

    Personally, $500 is little cost, if something goes wrong. Are you a gambler? Would you be happy if it burned down, storm damaged or was vandalized, and how how would you feel the knowledge that he lost his property and he was out of pocket, trying to save a few hundred dollars? You can not get much built for $500. If as you describing, the contents have little value, then reduce amount insured. That makes more sense.

    • CrankyCarrot on 07/01/2019 - 19:09

      Yeah, I will ring and double check, but it seems like the actual unit isn't covered at all. Just the "stuff," in it.

      If this insurance would pay for a new unit should his burn down etc, then I'd absolutely keep it.

      • kizashi on 07/01/2019 - 19:21

        $75k amount seemed strange for home and contents, even a unit. Definitely, check and determine what is covered. Also check if policy covers new for old. So appliances, such as fridge, bed and mattress, lounge suite etc. need to be included. Do not overinsure, but also be reasonable, on what you think is a fair value, which may or may not be replacement value. Also, shop around and see if other insurers any cheaper.

        • HighAndDry on 07/01/2019 - 19:28

          $75k amount seemed strange for home and contents

          Eh. It's a unit - most structural issues would be covered under strata building insurance. OP's dad's insurance would only cover fixtures, internal finishings, etc. (And hopefully liability insurance).

          • kizashi on 07/01/2019 - 19:34

            @HighAndDry: I am not familiar with the strata insurance, and would hope crankycarrot clarifys when existing coverage is in the strata and what extra insurance his dad needs.

        • CrankyCarrot on 07/01/2019 - 19:34

          What's covered is specified items (instruments, hobby stuff, camera/lenses), and 50k worth of unspecified items.

          • HighAndDry on 07/01/2019 - 19:37

            @CrankyCarrot: That sounds like a waste of money. You'd want to insure for really only liability, expensive fixtures (internal walls and flooring), and essentials like appliances (fridges and associate spoilage, washing machine?).

            • CrankyCarrot on 07/01/2019 - 19:45

              @HighAndDry: There is a washing machine somewhere… I think externally to the main unit. I wonder if that affects things with the unspecified item coverage through GIO?

              Another call I guess, sigh.

              Yes, I suppose he's (I've) got 50k to buy a new fridge, stove, untensils, lounge stuff etc etc. Right? Like the unspecified stuff would presumably cover the fridge and other white goods, no? I know, I know, I can call them again with that question.

          • kizashi on 07/01/2019 - 19:39

            @CrankyCarrot: Need to look at other items l mentioned. Furniture, household appliancew etc. Work out what you think is fair value and the items you also mentioned. Check if policy is need to old, or value is fair value. Ie if fridge is 10yrs old will not be worth much etc.

            • CrankyCarrot on 07/01/2019 - 19:47

              @kizashi: Policy was made 20 years ago.

              Which presumably means he's got good rates, maybe? Likely needs to be reviewed if we keep it. Renewal is in May and according to the rep I spoke to that'd be the best time to re-jig everything.

              • kizashi on 07/01/2019 - 19:58
                +1

                @CrankyCarrot: Not really. If 20yr old, definitely would be reviewing. Insurance companies reward new customers rather than loyal ones.

                • CrankyCarrot on 07/01/2019 - 20:03

                  @kizashi: Oh? Now that you mention it that is totally the case these days. Yes, I s'pose I'll keep reviewing the relevant details and do the needful.

            • CrankyCarrot on 07/01/2019 - 19:49

              @kizashi: I can look at the fridge and see how old it is from the sticker, I think.

      • johnno07 on 09/01/2019 - 14:35

        Just read the PDS. It should all be in there.

  • CrankyCarrot on 07/01/2019 - 19:06

    Hey guys,

    I've never dealt with this kind of insurance personally, so I may miss some stuff.

    It looks (on the letter I have) like it's actually just contents insurance. In my head I always thought people got "home and contents insurance" together. So really then it's just a laptop (not particularly expensive to replace) and the musical instruments which he doesn't play any more professionally or otherwise.

    He's in there 95% of the time, so if the place burned down we'd have bigger problems I'd say.

    Strata is paid quarterly, I believe.

    No $500 isn't the end of the world for peace of mind, but given there really isn't much to be gotten out of it it hardly seems worth it. On the pension every little bit counts, surely.

    • MrHyde on 07/01/2019 - 19:21
      +3

      What about furniture, electronics like TV, carpets, window furnishings, kitchen utensils, etc. Contents insurance covers a lot more than just clothing and laptop.

      • CrankyCarrot on 07/01/2019 - 19:33

        About 50k worth is "unspecified items," like that, yes.

        • HardlyCharly on 08/01/2019 - 14:46

          Whether you change or not, with contents insurance you should always list every item you want insured separately, not just group them together, each with it's own photo. If you do that you'll end up with a proper idea of the amount the insurance should cover, without all the junk which isn't actually worth anything.

  • Dancingprincess on 07/01/2019 - 19:14

    So he hasn’t got house insurance for if his unit burns down, is water damaged, storm damaged? So he will lose everything if something was to happen? That’s crazy.

    • CrankyCarrot on 07/01/2019 - 19:21

      Strata covers it, I believe.

      • barbarella on 07/01/2019 - 19:33
        +1

        check that…in my unit strata only covers external stuff…not kitchen, bathroom, internal walls etc

        • CrankyCarrot on 07/01/2019 - 19:35

          I will. Just spoke to the insurance co. GIO and he most def. does not have coverage for the unit itself/home with them.

          • barbarella on 07/01/2019 - 19:36

            @CrankyCarrot: OK…now find out what strata covers.I know they don't cover contents but you may need to get a policy that DOES cover internal fittings like kitchen, bathroom etc. AND his personal items

            • CrankyCarrot on 07/01/2019 - 19:43
              +1

              @barbarella: True. I'll call them tomorrow.

              It looks like there was a time when he was well on top of all this stuff, so presumably there's measures in place from back then I just need to make sure are still there.

  • HighAndDry on 07/01/2019 - 19:25
    +1

    I can't for the life of me think of any reason to keep the cover

    Liability insurance is usually included in home and contents insurance. Covers your dad if, for example, an internal pipe bursts, floods the unit and the building, and he's on the hook for remediation costs and damage to other people's property and common property.

    Strata insurance only covers common property, and/or damage caused by issues with common property. So if a common property water pipe bursts, it'd cover that. But while it would pay out for damage to common property, like all insurance they'll turn around and go after the actual responsible party if the damage was caused by someone else.

    Oh - liability insurance would also cover if someone got hurt tripping over hoarded stuff in your dad's unit.

    • CrankyCarrot on 07/01/2019 - 19:42

      "Oh - liability insurance would also cover if someone got hurt tripping over hoarded stuff in your dad's unit."

      He's pretty anti-guest these days so that would mean he'd have to sue himself, or I'd be suing my own dad… Or maybe that plumber could've taken a shot at litigation…

      Seriously, good to know about the liability ins. Added that to the list of things to discuss with the strata now they're back from hols.

    • DaneD on 09/01/2019 - 12:38

      Thanks this post helped me - gotta check mine now!

  • wizzy on 07/01/2019 - 20:06

    A third option would be to continue with contents insurance, but from a cheaper provider. I have always found Coles insurance to be the cheapest option for home and contents (not sure if they do contents on their own). You may be able to reduce the amount insured too - $75K seems high for a unit without much valuable stuff in it to me.

    However, if the building and liability are already covered by the strata, then I don't think I would renew it if he was my father.

    • Yabadabadoo on 07/01/2019 - 21:27
      +2

      yeah +1 for coles, my mum pays around $140pa for contents only (around $30k I think). looked online and it was way cheaper than others so told here to keep it for that price.

      • CrankyCarrot on 08/01/2019 - 13:36
        +1

        Thanks guys. This is the way I think I'll go, ie switch provider or cancel entirely, assuming strata covers liability/house burning down type stuff.

  • John Kimble on 07/01/2019 - 23:26

    Replacing the entire contents of a unit adds up. Did you use the contents estimator that most of them have? Or https://homecontents.com.au/ You are even able to manually adjust the estimate.

    Remember, it's not the cost of what it's worth when it comes to replacing most things…for example if your dad has a 20 year old fridge that someone wouldn't buy for over $50 it doesn't matter, it is how much it would cost to go out and buy a new fridge (which is of similar capacity as the old one). Which would be at least $500 easy. Same as clothes. Probably not fit for Vinnies, but to go out even to kmart and buy multiple new everything would be a few hundred easy.

    A new kitchen these days is at least $20k, and that's a budget one.

    Plus you've likely not thought of things like carpet, curtains, light fittings etc.

    I can go on and on, but my comment is already pretty long :/

    It's like when you grocery shopping for a few things and BAM! its over $100 in the blink of an eye; you look at the receipt, there's only 20 items, nothing costs over $10??? It just makes no sense! haha (except times it by 1000).

    The likelihood of these things being maliciously damaged, stolen or affected by fire/water damage seems extremely low to me. Hardly worth paying $500 a year to insure.

    I just noticed this part. Renders my long post almost moot. I guess that's the gamble you take if you dont get insurance. Up to you.

    • CrankyCarrot on 08/01/2019 - 13:40

      Yeah, but I need to bounce my instincts off other people to hone in on a final decision. All this stuff helps.

    • CrankyCarrot on 08/01/2019 - 15:15

      I'll use the calculator when/if renewing or changing provider. Cheers.

  • crashloaded on 08/01/2019 - 05:54
    +1

    I live in a strata building and have contents insurance for 50k. Strata insurance will not cover ANYTHING inside the lot that is not structural.

  • voiletmay on 08/01/2019 - 07:41
    +1

    75K is just too high. My mum is a hoarder and I reckon her contents are worth nearly nothing aswell. I think even 10K is too much for my mums contents LOL!!

    I just think get the amount insured for reduced and ring around an get a cheaper premium.

    But things like carpet, one time we got a new couch and my husband dragged it across the floor when putting it in position and it ripped the carpet. We got entire new carpet in our loungeroom and also on our internal stairs and landing. Was so brilliant (the old carpet was terrible). So yes, don't not have contents insurance.

    You just don't need 75K worth of it.

    • ihbh on 08/01/2019 - 09:58

      Are you suggesting that insurance paid for your husband ripping the carpet?

      • John Kimble on 08/01/2019 - 10:13

        If they've got accidental damage cover, then why not?

    • CrankyCarrot on 08/01/2019 - 14:00

      I feel the same way. Will review everything worth insuring and weigh up the pros and cons.

  • Nicoletta on 08/01/2019 - 09:16

    Yes, it's worthwhile. If all his clothes, furniture and appliances were damaged through fire, flood or (this happened to a friend of mine) a rogue possum, how much would it cost to purchase replacements? It's not about the worth of the existing items but the cost to replace them. Sure it seems unlikely, but most people think bad things won't happen to them.

    That said, shop around. That premium seems high for $75k coverage. I pay half that for double the coverage.

    • CrankyCarrot on 08/01/2019 - 13:45

      Yeah, the policy being from 1998, we could very likely wangle a better deal taking biz elsewhere, or threatening to.

  • BertieBrown on 08/01/2019 - 09:22

    I have a feeling that contents also covers carpet, and curtains? I’m not 100% sure though? If that were the case I’d probably be inclined to keep some sort of contents insurance, but perhaps something a little bit cheaper.

  • Masher84 on 08/01/2019 - 09:42
    +1

    We have minimum sum insured Contents insurance to cover liability off the property. Say you’re riding a push-bike on the footpath, run into someone and knock their teeth out. You would be liable if they sued (obviously depending on exactly what happened). But if that happened in your own back yard, your Home insurance would cover it. We are in Qld but I think this applies everywhere.

    I would very carefully read the PDS of the current strata policy to establish exactly what coverage your dad has and even get some advice from say a Community Legal Centre. But by default I think he should have Contents cover, just in case.

    • Noblejoker on 08/01/2019 - 10:43
      +1

      ^^ This is a good reason why everyone should have Contents insurance
      Refer another active thread on OzB My Toddler Broke LED Screen While at Harvey Norman

      Also as pointed out above Strata covers building structure only and no internal fixtures
      Typically strata will pay for damage to kitchen cabinets etc. but definitely not carpet, tiles and usually they won't even paint the walls
      A good Contents policy will cover whatever the Strata doesn't - the company i work with that is exactly what the policy says

      Be wary of the cheap and nasty insurers as they don't offer the service and try to 'cheap out' when you make a claim
      Go back to the current insurer first and negotiate
      At $75K there is scope to reduce if a lot of stuff you wouldn't replace if lost

      • CrankyCarrot on 08/01/2019 - 13:49

        The rep gave a ballpark estimate of what would happen if we halved the sum insured. It worked out to be about 35% cheaper.

        I suppose that's worth doing, but if I do keep it I'll check around with other places for a comparison rate. Seems like he's getting a bit of a raw deal currently.

  • demeter on 08/01/2019 - 11:35

    Why don't you just decrease it to 30k insurance and just pay the ~$200 this cover would cost. Still have the insurance but also saving money.

    • CrankyCarrot on 08/01/2019 - 13:50

      Might do just that, with whichever co. offers best rate (without screwing you over in the T&C).

      • Destin on 08/01/2019 - 21:51

        As fair as I'm aware Strata won't cover things like carpets, stoves, ovens etc. It's good to keep this in mind. I agree that just reducing the premium is a better option than forgoing it completely. I'd also see if you can up the excess to reduce the premium. I took my insurance from around $600 to $230 by making a few changes. Also check extra add-on's like 'portables' coverage. This adds a lot to a premium

  • savage bargain on 08/01/2019 - 12:12

    You also need to consider disposal costs in a case where things are destroyed, especially it's he's a hoarder, as it's usually part of the sum insured (if it's in addition to the sum insured, you can reduce the sum insured to suit - check the policy).

    Does the policy include accidental damage? That's quite a handy one to have, especially if you accidentally damage a few contents.

    He doesn't sound like he needs portable goods cover (if he never leaves and won't ever travel anywhere in Australia), so see if you can get that removed.

    • CrankyCarrot on 08/01/2019 - 13:51

      Will review policy with this in mind, cheers.

      I think the job of disposer will fall to me. As it is I'm chipping away at the mountains of precious garbage he's so attached to.

  • hawkers8905 on 08/01/2019 - 13:50

    I'm only paying ~$300 a year for ~$90-100k coverage (Couches, TVs, Laptop, PC, Phones, Sound System, Beds, Furniture etc - it all adds up).

    I rent so the landlord has the landlords/home insurance and I just have the renters/contents insurance.

    Definitely shop around for a better premium but you'd be surprised that $75k is probably what it would cost to refit his kitchen, buy him a new couch and clothes etc after a fire etc.

    • CrankyCarrot on 08/01/2019 - 13:55

      I'm pretty sure the kitchen fittings, cupboards and similar aren't covered. It's just the "stuff," that's in there, so fridge, microwave, plates etc - all to the tune of about 50k as it's sep from specified items like his musical instruments, camera etc.

  • Dazza610 on 08/01/2019 - 13:52

    Has anyone thought that some of his (old shit) might be VERY valuable collectables?
    What might be crap to a 20 -30 year old… Just might be an investment that he purchased for it's future value.
    I would suggest getting valuations before using the skip-bin…
    Apart from the REAL crap, which includes furnishings, clothes, carpets etc…(easily replaced)
    My crappy stuff… Is the most valuable things, that are totally irreplaceable one off items, some of which would top out in $10's of thousands, even stuff that might have chips & scratches can command large amounts at auction.
    Think first, before you put more value on the REAL crap and less on what YOU think is crap.

    • CrankyCarrot on 08/01/2019 - 13:59

      Easy Dazza610,

      It seems that the stuff he felt was particularly valuable (and likely was to him both professionally and on paper 20 years ago) is listed under specified items, which totals around 25k. He has letters certifying the value of the musical instruments. The DSLR camera has very likely dropped significantly in value in terms of cost to replace.

      It's possible that he has old records that may be worth checking out on eBay, but he certainly wasn't aware of anything outside the list of specified stuff being of enormous long term value.

  • preferredusername on 08/01/2019 - 17:09
    +1

    It seems like others have already given valuable insights, but to reiterate based on my own experiences: as someone whose apartment was recently flooded, I would say it is worthwhile, even if the chances of malicious damage/flooding/etc are slim. Things like carpets/curtains also come under contents insurance rather than home, and small everyday things like crockery etc can surprisingly add up. I am confident you could find the same, or a more appropriate level of cover for a more competitive premium. I think like many things these become "set and forget" even though our circumstances change.

    I have found Coles to be very price competitive, and although I've only made smaller claims before but have found these to be very straightforward. I have also favoured RACV in the past as they make the claims process quite straightforward too. As for clearing stuff… Marie Kondo has a great book on the magic of tidying up, haha. Also, kudos on helping out your folks, that's very sweet and generous of you :)

    • CrankyCarrot on 08/01/2019 - 21:04

      "kudos on helping out your folks, that's very sweet and generous of you :)"

      Thanks.

      Will def look into Coles insurance as they seem to keep coming up here for having the best deal.

      "Marie Kondo has a great book on the magic of tidying up," - I'm guessing that's the same Japanese woman who's just popped up with a series on Netflix. Having just cleaned up a mate's (extremely foul and untidy) place in exchange for a month's house sitting rights rent free, I don't share her love of mess.

  • Sinful on 08/01/2019 - 21:03

    What is the total worth of the 'contents' in your house?
    Could you save up enough to cover the total goods?

    If so, put the money in a redraw account off your homeloan to save on interest(if you have it) and don't bother with contents because there is no guarantee that you will get the money if something happens.

    If not, get contents insurance if you are not prepared to lose all of your contents and save money until it matches the total cost of your goods…. then get rid of contents insurance.

    -
    No point having another bill to pay each month, if you can avoid it.

  • snajper on 08/01/2019 - 21:59

    Be careful…. to my best knowledge strata insurance only covers extenal building which means for eg kitchen and bathroom walls are
    Only covered… to replace kitched and one bathroom it will cost 25k+ on top of existing content… what about flooring, carpets etc…..look into it…

  • Dreamcast on 08/01/2019 - 22:10

    The Strata/body corporate home insurance does not cover the full value of the home from what I've heard. Sorry, I'm not that up to speed on how it's covered, but a family member was advised they're only covered up to 75% of the current market value. They would need to insure the remaining 25%.

  • Neopiya on 09/01/2019 - 02:18
    +1

    Contents insurance can also cover things such as Motor burnout (ie on fridge/washer/dryer), food and medication spoilage (if power goes out for an extended period of time), glass damage such as shower screens (which may not be covered by strata).
    I'd suggest reviewing the sum insured. Check the specified items. Ask the insurer if they're specified contents or specified valuables. If they're the latter, you'll be paying more to have these items covered away from the home which would be increasing the premium.
    Also, her a quote from Apia. They have policies specifically designed for units, where whilst they cover the contents, they may also fill gaps that the strata cover leaves, which may be things like an air conditioner etc.
    With them you also have the option to remove the excess entirely, which would mean he would be able to claim for smaller things such as Motor burnout.
    Also review the sum insured. Think about how much it would cost to buy everything brand new, including carpet, clothes, etc it didn't take long to add up to at least $30k in a unit.

  • vengeance88 on 09/01/2019 - 11:57

    I live in a strata complex. I buy contents insurance mainly due to the risk of fire. It's not vandalism/theft I'm worried about, and flooding risk is pretty low. But you never know if some electrical wiring will spark and toast your place. The cost to replace carpet, blinds, beds, large appliances and furniture is very significant if the place burns down… Let alone the stress it would cause.

  • nemesis on 09/01/2019 - 13:20
    +1

    I ditched my contents insurance in my strata over 10 years ago. At over $500 a year including inflation, I'm over $5,300 ahead. The savings are even greater if you've put that money into your mortgage. And I don't have to worry about negotiating the premium every year due to the automatic increases.

    IMHO, Contents Insurance for apartments isn't appropriately priced. Risks such as flooding, theft, etc, are substantially less than for a single detached house.

    • eclaw on 09/01/2019 - 15:31
      +1

      I have insurance via strata but also opted out of contents for similar reasons.

      I'll add an extra point here - insurance is best used to shift risk away from events that you cannot recover from (life, health, income etc etc.) Anything else is optional (comprehensive insurance on a cheap car) or downright poor value (mobile phone and appliance warranties).

      Also Keep in mind that all internal fittings will depreciate over time, you may spend $20k on appliances and furnitures today but it's likely to lose 10% of its value each year while the probability of a catastrophic disaster (fire) remains stable (low).

      I'm not saying not to buy insurance, but if you can afford to replace what you have then insurance is not as necessary as you think, it is only for a peace of mind.

      Insurers price their policies to earn a profit after all.

  • myusername on 09/01/2019 - 14:12
    +1

    what's your address?

    i'll see if it's worth while

    • zathras on 09/01/2019 - 14:26
      +1

      127.0.0.1

      • myusername on 09/01/2019 - 14:27

        oh here we go

        physical address lololol

        • Melong on 09/01/2019 - 16:19

          00:26:55:4A:57:83

  • TimApple on 09/01/2019 - 15:58

    I pay around $250 per year for about $30k cover. I think it's pretty cheap.

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