“What’s the difference between house insurance and contents insurance?” is a question customer service people hear daily. Usually it’s coming from a first-home buyer or a young person who’s just left home and is no longer covered by their parents’ policy.
It’s easy to understand the confusion. When you think of home, you’re thinking of the building you call home and all the stuff that’s inside it. However insurers don’t see it quite that way. We see the structure as one thing (the home or house) and the stuff inside as something else (contents).
Our tips for buying home and contents insurance could save you a lot of time, worry and money. The more you know, the better you’ll be prepared for whatever life throws at you.
Tips for getting home insurance
When you see the words ‘home’, ‘house’ or ‘dwelling’, you can be sure the insurer is talking about the actual structure of the building, plus extra things like garage, fences, decks and swimming pools.
Basic house insurance policies might only cover fire, theft and flood, so you’ll probably want a comprehensive policy that covers all major events, including accidental damage that you or your family might cause.
When you’re sorting out insurance for your house, you are responsible for coming up with an accurate ‘sum insured’. This figure represents the maximum an insurance company will pay to repair or rebuild your house. Problems can occur when this figure is too low.
If you don’t take the time to get an accurate figure for your sum insured, your insurer will come up with a ‘default sum insured’ that’s based on averages and assumptions. If a rebuild turns out to cost more that the default sum insured, you’ll be responsible for paying the difference. Ouch!
Tips for getting contents insurance
Contents insurance is designed to cover all the possessions that exist in your house, including the curtains, carpet and built-in heating. So all the stuff in your kitchen, including the fridge, appliances and food; all the furniture and art in your lounge, including audio video equipment and ornamental collections; all your bedroom furniture, clothes, shoes and jewellery (yes, designer handbags are included); and all your play things, from lego sets to sea kayaks. It even covers your phone, glasses and the cash you carry around in your wallet.
Things can get a bit trickier when you own expensive pieces of jewellery or art. They can be covered, but you may need to get expert valuations for items over a certain value and specify them separately on your policy.
Look for a policy that covers keys and locks. If you get burgled and the intruders take your keys, key and lock cover means you won’t have to pay out to have the locks changed.
A good comprehensive contents policy will include all sorts of handy extra things like alternative accommodation costs, hidden gradual damage and home office contents. While it’s always tempting to get the cheapest possible cover, you could be left out of pocket if your home is burgled or burned down.
Make sure your contents insurance covers belongings you take out of the house, like phones, laptops, sports equipment and clothes.
It’s important to work out the value of your possessions carefully. Guessing isn’t good enough. Use an online calculator to make a list and get an accurate estimate.
As you buy more stuff, you’ll need to increase the amount your possessions are insured for. Keep receipts in a file when you make a purchase, then review the receipts every time your policy comes up for renewal.
Tips for flatting
When you leave your parents’ home to study at university or go flatting, contents insurance should be top of mind. Your possessions may not be worth a lot, but imagine if you had to replace them all suddenly. Expensive!
Some insurers offer renters’ insurance; a purpose-built type of contents insurance for people who don’t yet own a house.
You might get a discount off your contents insurance if you insure your vehicle with the same company.
If you want to go travelling for a few months or longer, you can either store your stuff at a friend’s place, your parents’ place or in a storage unit. Talk to your insurance company about how best to approach insurance cover while you’re away.
Best tips for avoiding burglary
Between July 2014 and December 2016, more than 160,000 homes were burgled in New Zealand. According to reports, the days when you’re most likely to be burgled (in rank order) are Saturday, Sunday, Friday and Monday. The most popular time of day for a burglary is 2pm. 1
So if the house is empty at 2pm on a Saturday, you’ll be hoping all the doors and windows are locked, and the alarm is on!
Number one tip for avoiding burglary is having a monitored alarm that you set every time you go out. Monitored means it’s linked to a security company who will send a guard if the alarm is activated. Relying on neighbours to check your house out when the alarm is activated is not the best idea.
Another approach to security is an alarm system with CCTV. Cameras can stream real-time footage of what’s happening in your house directly to your phone.
Use lights and TVs on timers, washing on the line and cars in the drive to give the impression someone is home. A home that’s obviously empty on long weekends and during the Christmas holiday period is asking for trouble.
Get NZ Post to hold your mail when you’re away and organise someone to mow the lawn.
Trim trees and bushes that might conceal burglars from the street while they’re breaking in.
Get a secret safe for valuables, like jewellery, cash and passports. Home safes are not just for the rich and famous.
If you've just bought yourself a new TV or computer, don't put the boxes out on the street for opportunistic burglars to notice. Collapse the boxes and stash them in your recycle bin.