Imagine this. You just landed at the airport after an amazing week-long vacation. You hop in your car and drive to the house you’re renting. When you arrive, you see the fire department putting out a massive blaze.
While you don’t own the home, you own everything inside. All of your clothes, furniture, electronics, and household items are a total loss due to the blaze. You call your landlord to see how much they’ll pay to replace your items and they tell you not a cent.
You find out you’re responsible for insuring your own contents. Your gut sinks and you now realize you’re out thousands of dollars. Thankfully, the story doesn’t have to end this way. If you have contents insurance, your household items could be covered.
Here’s what you need to know about contents insurance so you can avoid the same fate.
What is contents insurance?
Contents insurance, often called personal property insurance, is usually a portion of another type of insurance policy. You can find this insurance on typical renters, homeowners, and condo insurance policies.
Contents insurance protects you financially from losses from covered events that damage, destroy or result in stolen personal property. Your belongings will typically be covered from common events such as fires or robberies.
You may have to pay a deductible when you make a claim. The deductible will reduce the amount of money you receive for your claim. However, your deductible won’t be that big of a deal in large claims such as the house fire described earlier.
Your property is more valuable than you think
The value of your personal property contents in your home is likely higher than you would think. You could easily have tens of thousands of dollars of personal property. In fact, it wouldn’t surprise me if some people had over $100,000 of personal property within their home.
While you wouldn’t think replacing all of the personal property in your home would cost that much, you slowly purchased each item over time. Each item cost adds up. If you had to replace absolutely everything at once, you’d likely find yourself overwhelmed with a massive bill.
It can help you replace your lost belongings
Insurance can help you replace these items should your home burn down without the stress of figuring out how you’ll afford to replace everything. It’s important to note, personal property insurance will only cover you up to your policy limit.
You should take inventory of your household items so you can accurately give a list of what needs to be replaced if you need to make a claim after a total loss such as a house fire. Taking a video inventorying your household items can be useful, as well. This inventory list or video can also help you approximate whether you have enough coverage.
The best contents insurance overview
Allstate First-time insurance buyers
Lemonade Peer-to-peer insurance
Policygenius Rate shopping
Best contents insurance for first-time buyers
Allstate is a great company to consider if you’re new to insurance, including renters, homeowners, or condo insurance.
Their website has a lot of great information about what is typically covered under insurance policies and their agents can help you find the perfect policy for you.
Get a policy with Allstate or read our full review.
Best peer-to-peer contents insurance
Getting insurance through Lemonade is a great option for socially conscious consumers.
Lemonade turns traditional insurance on its head by taking a flat fee from the insurance policies it sells. They use the rest of the money to buy reinsurance and pay unavoidable costs required by insurance companies. Any money left over isn’t distributed to shareholders as profit. Instead, it’s donated to the non-profit of your choice.
Get a policy with Lemonade or read our full review.
Best content insurance for rate shopping
Policygenius is an insurance broker that offers both renters and homeowners insurance quotes. The power of using a broker, like Policygenius, is they can shop multiple insurance companies at one time to get you the best policy and pricing.
Policygenius may not have access to every insurance company you want to check, though, so make sure you get quotes from other top contenders, too.
Get a policy with Policygenius or read our full review.
What does contents insurance include?
The value of your property
While contents insurance coverage varies from policy to policy, it typically covers the value of your personal property up to your personal property coverage limit named in your policy.
There are certain types of property that are excluded or require special documentation or additional fees to be covered.
For instance, most policies limit the payout you’ll receive for certain items such as cash, jewelry and fine art. You can opt for additional coverage by adding a feature called scheduled personal property. You’ll pay extra to get the additional insurance coverage. Your insurance company may require an appraisal that proves the value of the specific items you want to insure.
Depending on your policy, you may be reimbursed for your property on an actual cash value or replacement cost basis when you make a claim. Actual cash value coverage is generally cheaper but will leave you in a bind when you go to replace your belongings.
This type of insurance only reimburses you for the depreciated value of your personal belongings. Generally, the older the item is the less money you’ll receive using actual cash value.
Who should get contents insurance?
The cost of these policies typically isn’t very expensive. The personal property coverage provides great peace of mind should a hurricane wipe out your home and everything within it. You should get contents insurance if you can’t afford to replace all of your belongings tomorrow.
Even if you could afford to replace everything, it often makes sense to consider this insurance. If a covered event that completely destroys everything you own would result in major financial stress, you should seriously consider purchasing the insurance.
Where to find contents insurance
Generally, the insurance you pick depends on your housing situation. You can find contents insurance as part of renters, homeowners, and condo insurance policies with most major insurers.
All three types of policies should offer personal property coverage at some level. While some insurers may not offer insurance in your area you have plenty of options to choose from which may include the following companies.
As with most major purchases, we recommend getting multiple quotes for contents insurance and comparing them to find the best product for your situation. In this case, look at the insurance policies, what they cover, what is excluded, and the price you pay for the coverage.
You should also consider the company’s financial rating, customer service ratings and their reviews from members that have had to make claims in the past. In the end, you should pick the insurance policy that offers the best value for your particular situation.