Contents insurance: How to insure your personal property

Contents Insurance is protection for your personal possessions, whether it's in your house or while you travel. Whether you're a homeowner or tenant, contents insurance offers coverage for your things - be it your furniture, your electronics, your clothing, and your art and jewellery. Contents insurance is part of any comprehensive home insurance policy and is the central portion of a tenant's insurance policy.

For homeowners or condo owners, contents insurance is pre-packaged with your comprehensive policy. Depending on your insurance provider, there can be limits and exclusions. Still, because it's an overall package, the idea to cover everything is considered a best practice.

For tenants, contents insurance and their limits are more defined. You tell the insurer how much contents insurance you need to protect all your valuables. For example, you could have a small wardrobe, an old tv, and a cheap laptop and to replace everything you need $5,000, so you can buy contents insurance for that amount. But, you could have a 4K LED television, a high-end laptop, and other pricey possessions and to replace it all could cost upwards of $30,000. So for this example, you'd seek at least that amount of contents insurance and would update the amount if you purchased more expensive possessions. 

At the end of the day, it’s up to you to decide the best contents insurance coverage amount for your needs. Keep in mind that insuring rare jewellery would require an additional schedule to your policy – talk to your insurance broker for more information. No matter what type of possession or valuable, it's best to keep a record and ideally with their receipts. This makes filing a home insurance claim for contents coverage a much easier process. 

Contents coverage is one component of a tenant's insurance policy. Tenant insurance also includes third-party liability insurance protecting you, the tenant, in case someone injures themselves inside your space. It also covers additional living expenses if you need to move out of your space due to an insured claim. For example, let's say you're the victim of a major flood or fire, tenant insurance will pay for your accommodations elsewhere while repairs take place in your home.

Tenants are encouraged to buy their own insurance; in fact, some landlords insist on coverage.

Without tenant's insurance, If you lose all of your valuables in a fire, those items are gone. Your landlord bears no responsibility for your possessions. That said, a tenant should look at other endorsements (add-ons) to their policy, especially if they live in a basement apartment. Many perils are covered, like damage from a fire or a burst pipe.

Still, there are also many exclusions where you wouldn't be covered. For instance, if the main sewer line backs up or if heavy rain is the cause of the flood, you'll want to add a sewer backup endorsement and an overland water endorsement, respectively.

A peril, or risk, is an event that could damage your home and its property. Common perils protect standard risks in most home insurance policies. They include damage from an electrical current, explosion, fire, lightning, smoke damage, theft, vandalism, water damage from a burst pipe or wind and hail damage.

However, it's vital to read your policy and understand any exclusions that may exist.

For example, if you live in an active earthquake zone, you’ll need to add earthquake insurance to your policy to be protected. 

If lightning strikes, most policies will cover any related losses. But what if the lightning strike created a power surge destroying your precious electronics – would they be protected?

Finally, let's say you're the victim of home vandalism and theft. Most home insurance policies will reimburse you for any damage related to break-ins, and thanks to your contents insurance, you will be able to replace your valuables. However, there are limits to how much your insurance provider will give you.

So, know what perils you're protected against, and what you're not. Seek endorsements or add-ons where needed.

An insurance company will replace your contents. But there are two different ways to do it: actual cash value or replacement cost. Read more on our blog: Actual cash value vs. replacement cost.

Your home insurance policy will set out specific contents insurance limits and exclusions.

Generally, exclusions include things like glassware, china, collectibles, antiques, or fine arts. Still, you can always insure these items by "scheduling" them with your home insurance provider. Scheduling means you're listing a specific item for a predetermined amount of money, and they'll tell you how much it will add to your premium.

There are also items with special limits, meaning they are covered, but maybe not to the full extent of their value. They include things like bicycles, golf carts, watercraft, jewellery and watches, fur items, silverware, or a wine collection. Again, you can buy extra insurance for these, either with your primary insurer or a third-party insurer. If you do opt for a third-party insurer for one particular item or set of items, make sure to understand all of the applicable exclusions.

Each insurer will set different limits on each item or collection, so be sure to understand yours, especially if they are valuable to you. Below, we show an example of different contents insurance limits offered by a popular Canadian home insurance company.