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.
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.
Another area you want to guarantee is covered is the replacement value. This differs from the current market value in those extremely important valuables such as antiques and jewelry will be at least covered at replacement or emotional value if they are unable to be replaced. Expect higher premiums however if you wish to protect these coveted items.
Most people will not have to worry about a ton of replacement value since you likely do not own a lot of jewelry or antiques. However, current market value is a good way to rip you off. Insurance agents will assess the value of the stolen or lost goods based on current value and not what it was worth back in the day.
Replacement coverage is much more expensive, so you can expect high premiums. It comes down to protecting for the future or for something that may or may not ever happen. On average, people who take out house contents insurance also look at the cross section of the value of their possessions losing money.
All in all, an average appraisal of house contents reach around $200,000 a year and the annual insurance costs will average out to about 3% of that value or $6,000 to be more precise.
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