I have been renting all my life, finally got my own place and will be moving in early next year.
I am wondering whether I need home contents insurance as I’ve never had one while I am renting. It is a 2bedroom apartment on the second floor of a small block in Sydney inner west (city of Canada Bay) very low risk of natural disasters and not a particularly dodgy suburb either. It seems to be the normal thing to do, what I want to understand is how is it different to renting?
I understand the difference and my question was strictly about home contents. Home building insurance will be covered by strata levies (and strata report looks good so far) so not something I will worry about.
It's no different to renting. You can either choose to cover your contents by paying for contents insurance or you can choose not to.
Home contents is not only for things being stolen. Ask yourself. Can you afford to replace all your contents if something were to go wrong - say,
- a tile in the ceiling broke and flooded your apartment causing your electrical items to short circuit
- or a pipe in the bathroom burst again causing flooding
- or a fire broke out due to a dodgy power charger
If you don't have much contents or they are easily replaceable; then the answer might well be Yes, you can afford to replace them - so no home contents insurance required.
Thanks for providing some real life examples they definetely help to put things in prespective.
I buy most things second hand and I don't spend much on electronics (didn't have a TV until two years ago which I bought one for under $600). I am thinking I can probably afford to replace contents unless my way of living changes (which could happen, now that I have my own place). Seems like I need to do some calculations.
Contents insurance is generally pretty cheap. I wouldn't go without it however if you do choose to go without it then chuck $50 a month into a savings account somewhere and build up some rainy day funds incase something does happen.
Whilst you are happy to shop second-hand, just remember than you it can be quite time-consuming and slow at times if what you want isn't available. Also, depending on the loss event this may be difficult for you to do when you are urgently needing things such as a bed/fridge/washing machine/couch/personal items.
Do you have enough money to replace everything you would want to replace within your house should something happen to it all?
One thing contents covers that strata/building doesn’t always is flooring, which can get super expensive.
Personally, I would not bother as on a risk/reward basis the insurance is not worth the cost.
For my part I have paid for buildings and contents for the past 25 years, paid over $50,000 in premiums and only ever made the one building insce. claim of $7,000 for hail damage.
I find this kind of comment frustratingly stupid
Of course, the majority of people make claims less than their premiums, if that wasn’t the case insurance companies would quickly be bankrupt!
The value of insurance isn’t the expectation that you will predictably get back more than you paid, the value of it is, in the unlikely event of some significant issue you have minimised you risk of major financial loss (which in some cases may be so severe it would take many years, if ever to recover from)
You obviously do not understand the concept of a risk/reward assessment based decision
Hahaha, sure brah
I look forward to your post on “xyz happened and I don’t have insurance, please help!”
Of course, it goes without saying, you are cleverer than all those people who have and recommend insurance
You do you
Solid agree. The alternative is "why did I bother wearing my seatbelt all those times when I didn't even have an accident, what a waste of time"
+1 exactly
We are talking about a bunch of second hand furniture, hardly likely to be a severe loss it would take many years to recover from, very practical to self-insure for many people. I'd enjoy the chance to get new stuff personally. Could still mess someone up a little if they have no savings.
OP was asking about contents, ocker’s comment made reference to building insurance
I think you mean cost-benefit.
People tend to discount things like worrying about if the next thing will financially ruin you, or the headache of organising repairs and getting quotes.
You hope to never need to rely on it, but when it's there, you're glad it's there (at least got major events). You house is smashed by a tree but it's one less thing to worry about than the how many ten/hundred thousand repair bill you'll be seeing.
It's not membership or an all you can eat buffet: it's literally in the name. You're paying for an assurance.
Next massive storm/flood/bushfire.
….. man unwilling to purchase insurance has lost house. To assist, his family has setup a GoFundMe….
You’d be surprised how quickly it all adds up when you go through your entire house. I started cataloguing everything (eg; electronics, appliances, furniture, clothing) and taking photos and serial numbers. Takes ages
My partner’s family home partially burned down, all contents were destroyed by smoke/water.
Buying everything, all at once is costly and stressful, insurance helped, but was not a panacea. For example, they steered them toward Harvey Norman for furniture and appliances.
Due to this experience, we have contents insurance, but if it was down to me I would be happier putting $15000 in the bank and adding $100 a month as self insurance.
Judge for yourself if you are disciplined enough to take that approach, and consider how you would go replacing every bed, lounge, table, fridge, toaster etc. at once.
Are you a hoarder or a minimalist? Do you keep items for sentimental value or move things on when not longer used?
Insurance is essential if you cannot afford to replace what you have.
Can you get a quote? It might be relatively cheap to insure for a low-ish value. Even if the amount insured doesn’t cover you for all your belongings having a policy that’ll pay you out enough to quickly go buy a wardrobe full of clothes and some pots, plates and towels could be worth it.
Insure for a low-ish value? That is called under-insurance - when you make a claim, the insurance company will mark down your claim if they believe you have under insured your contents, that is, insured for less than their full value. So for instance, even though your claim may just be for the fridge, if the company thinks you have only insured 50% of the value of your contents (say you insured $50k when the contents are worth $100k) they will only pay out 50% of the replacement value of the fridge, even though your claim is only for a fraction of your stated contents value of $50k.
Wasn’t aware of that, however in reducing your insured value the premium should come down and make up for some of the difference. If you’ve got funds to be able to purchase some items you may not need to be fully insured.
Being underinsured would be better than being not insured in the event of a total loss event.
Just get it ffs
I have it so if something happens, it's not going to devastate my savings.
I'm in a bushfire zone though. But even when I lived in the burbs and had wonderful retired neighbours who always kept an eye on my house while I was out, I still had content's insurance. Nobody ever expects their house to say, burn down, flood etc.
Also congratulations on getting your own place. It's a great feeling.
I think its worth it.
If i was to lose my house to a fire or burglary, furniture (Couch, TV and a couple of beds alone is 10k.
Then you factor in electronics, kitchenware, bedding, clothes etc it racks up pretty quick.
Contents insurance can also cover your smartphone in and outside the home, which is nice if you ever break a screen or lose it. Excess is relatively cheap for a new phone.
Caveat: when i was younger and i had mostly 2nd hand furniture items i didn't bother
You probably should have had the contents insurance when renting too. All your clothes, your TV, furniture, fridge, dishes and cookware, all of it would cost many thousands of dollars to replace. For a lot of us the TV alone would justify the insurance premiums. Take photos of everything you own to help later if you ever need to claim.
My mother has used her contents insurance at least 12 times to get a new smartphone, maybe even more than that because she's been doing it since before the modern smartphone. Her last iPhone she broke three times.
Don't forget contents insurance provides legal liability cover so if you run over someone's foot on your bike / scooter or errant shopping trolley in a carpark into a car or someones knee etc you might be thankful then also.
I had an expensive guitar and road bike stolen out of my garage about 15 years ago. At that point I wished I’d had contents insurance. But if I’d paid for insurance for the past 15 years, it probably would have cost me more than the bike and guitar.
Recently had a washing machine overflow and flood the carpet in part of the house. Contents insurance picked up the bill including the cost of someone to come out after hours and bring in large blowers to dry up the water, removal of the carpets and re-laying of new carpets. While I'm sure over the years our contents insurance has covered the nearly $10k bill a few times over, the hassle of having to organise all of this yourself can be worth the additional cost.
Absolutely!
People who are used to self insuring will not understand the need for insurance.
Let them self insure.
The strata building insurance will most likely cover the structure of the building. You'll need to see if it covers anything that isn't common property.
Contents insurance will cover not only your possessions but also the internal furnishings of your apartment. For example, if there is a fire and the walls and flooring need replacing, your contents insurance will cover this.
Due to the low likelihood of these events occurring, the insurance premiums are quite low for the amount that you can have insured.
While you were renting, you only had to worry about your possessions which can be a risk you're willing to take. Now you need to ask yourself if you're able to pay for an entire apartment gutting and fit-out plus your possessions.
I'm in the same scenario as you and have a contents policy for approx. $350K.
Not sure if you have checked for the cost but home content insurance is minimal on top of the home building insurance, it may cost a bit if it's a stand-alone policy but for those on a mortgage and are required to have insurance, the extra premium to cover for 25k content (which is quite a lot for a minimalist) isn't worth bean counting.
Home building insurance and home contents insurance are not the same thing. Although contents insurance is sometimes offered with home insurance.
Home building insurance covers the cost of loss or damage to the physical structures that make up your home buildings, from the house itself, to your garage, fences, sheds, and more.
Home contents insurance covers the cost of loss or damage to your contents at home, such as your furniture, white goods, rugs, electrical appliances, or even your clothes, linen, and more.
Some providers offer a Renters Insurance which covers the cost of repairing or replacing your belongings kept at your rented home, such as your furniture, electrical appliances, clothing, linen, kitchen items, and more.
Definitions from: https://www.allianz.com.au/home-insurance.html
You do not need home building insurance if you are renting someone else's property. Landlords tend to take that out instead.
You may choose to want home contents insurance or renters insurance depending how valuable and irreplaceable your possessions are to you. Only you can answer that.