Contents insurance is a type of coverage that protects your personal belongings from various risks such as theft, damage, or loss. It can include things like your furniture, artwork, jewelry, etc., and is typically included as part of your comprehensive home insurance policy. Otherwise, it can usually be added as a standalone policy.
Sometimes people refer to this as personal property insurance, personal belongings insurance, or even home/household contents insurance. It's often confused with tenants or renters insurance, but there are a few differences between these types of coverage.
Here, we look at how contents insurance works, what it does and doesn't cover, and a few more of the finer details of this insurance product. Let's get started.
Key Takeaways
- Contents insurance provides protection for your personal belongings against damage, theft, and more.
- Your contents insurance may provide replacement cost, which means it will give you the full amount required to purchase a brand new replacement item.
- Actual cash value means that your insurance replaces your belongings by giving you money based on their current worth, considering any wear and tear.
- Contents insurance and tenant insurance aren't the same thing, but tenant insurance does provide content insurance.
How contents insurance works
To cover your personal belongings against damage, theft, etc., contents insurance requires that you pay premiums. Then, if an event occurs, the insurer reimburses you for the cost to repair or replace your items, up to policy limits – and, of course, deductibles may apply. It's essential to review your policy details to understand coverage specifics.
Contents insurance protects the valuables commonly found in homes, but you may have to purchase other, specific coverage for certain high-priced and/or highly personal items, such as a baseball card collection or fine china.
Actual cash value and replacement cost
There are 2 ways that your insurance company will replace your valuables: by providing actual cash value (ACV) or replacement cost.
A company will provide ACV by taking into account the cost to replace your valuable(s) as well as any depreciation involved. If your 5-year-old laptop is stolen, your insurance company will consider the resale value of a used item of the same age and offer you that amount as a payout.
There's a formula that's usually followed in cases of ACV:
Replacement cost - Depreciation = ACV
If your insurance company offers replacement cost, though, they'll simply give you the amount of money needed to replace the item(s) in question. In the case of the laptop mentioned above, you'd be given the full amount of money required to purchase a new one.
Unsurprisingly, ACV policies usually cost less than replacement cost policies, since ACV requires you to cover some expenses out of pocket.
What's covered by contents insurance?
Contents insurance coverage doesn't include every single item in your home, but it will include many of the more expensive items. Here's a general idea of what is covered:
- Furniture
- Appliances
- Electronics
- Artwork
- Collectibles
- Jewelry
- Sports equipment
- Musical instruments
- Kitchenware
- Clothes
- Bicycles
- Books
- Toys
- Firearms
All insurance policies have a maximum limit, and there are often specific limits mentioned for certain types of items. So while your jewelry and collectible artwork may be included by your contents insurance policy, you'll want to check and see your policy's max to ensure it's enough. You may need to add a policy endorsement to cover certain items valued above the max your home insurance will provide.
It's also possible that some things, like artwork and memorabilia, will be required to meet unique conditions in order to receive their full replacement value. You'll need to check with your insurance provider to see if there are any such conditions associated with your specific policy.
In general, the first step you should take before adding contents insurance to your policy is to create a home inventory. Walk around your home and take photos of everything you own, opening closets, cabinets, and drawers to make sure those enclosed items are included too. Then create a spreadsheet that lists all of your belongings and their estimated value.
What contents insurance doesn’t cover
The specific exclusions can vary depending on your insurance policy and provider, but some common items not protected by contents insurance coverage include:
- Cash and currency
- Pets
- Personal memorabilia
- Personal artwork
- China
- Antiques
- Business property
- Data
- Cryptocurrencies
- Illegally acquired property
- Motorized vehicles
Most high-value items within your home can be "scheduled," or listed with your insurance company and included in your policy as an add-on.
Plus, things that you'd normally get a separate policy for anyway won't be included. You already pay for car insurance, for example, so your vehicle definitely won't be included under contents insurance.
What are the differences between contents insurance and tenant insurance?
When considering contents insurance vs. tenant insurance, the thing to remember is that tenant insurance is simply contents insurance for renters. However, tenant insurance is broader than contents insurance. It includes things like:
- personal liability,
- overland water protection,
- hail and earthquake protection, and
- additional living expenses.
On the other hand, contents insurance simply protects your belongings. Plus, contents insurance is available for non-renters too, providing protection for all types of homeowners as well as renters.
Best content insurance providers
It's difficult to pinpoint insurance companies with the best contents insurance policies as they're fairly standard. But we do have a few favourite providers of home and tenant insurance:
- TD Home Equity FlexLine,
- Sonnet Home Insurance,
- RBC Tenant Insurance, and
- Scotiabank Home Insurance.
TD Home Equity FlexLine is Canada's best home insurance option, without question. They provide policy options that feature All Perils coverage, which means your treasures and belongings will be protected from just about any event you can think of, rather than just a few specified dangers. Plus, most of their contents insurance policies provide full replacement cost, so you won't be paying out of pocket to replace anything.
While few opt for a home equity line of credit instead of getting a traditional mortgage when they have relatively little equity in their home, this option can be attractive to those who owe less on their home. With the ability to split your TD Home Equity FlexLine into a revolving portion and a term portion, you can take advantage of interest rates when they're low and flexible prepayment options at the same time. You could use the term portion to pay off your house, for example, and the revolving portion to pay down existing debt or do some renovating.
- Good credit and adequate income
- At least 20% equity in your home
Will you get content insurance?
Home insurance and tenant insurance are both strongly encouraged. But before you commit to a specific insurance plan, you should ensure that the contents insurance policy will cover your important belongings and that adequate compensation will be provided.
What does your content insurance policy look like? Are you happy with your coverage?
Please share your thoughts and insight in the comments section below.
FAQ
What is contents insurance?
Contents insurance is a type of coverage included with your home insurance that protects your personal belongings. This can include items like furniture, clothing, electronics, and kitchenware. However, it doesn't cover things like cash, antiques, or business property.
What's covered by contents insurance?
Items covered by contents insurance include items like furniture, clothing, electronics, and kitchenware, but not things like antiques, or business property. All insurance policies have a maximum limit, and there are often specific limits mentioned for certain types of items.
Do I need home and contents insurance?
Depending whether you rent or own your home, you should have either home insurance or tenants insurance. Contents insurance will be included in either of these, but you should read carefully to determine any exclusions or limitations.
Is RBC content insurance good?
RBC Home Insurance and RBC Tenant Insurance are both quality products that include contents insurance. However, RBC Home Insurance earns a higher Genius Rating, which indicates that it provides more well-rounded, reliable type of coverage.
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