What Is Contents Insurance and How Much Do You Need?
Contents insurance covers the things inside your home: everything from your furniture and electronics to your clothes, kitchenware, and tools. It's separate from building insurance, which covers the structure itself.
Most Australian renters and homeowners have some form of contents insurance. But many don't know how their cover amount was set, and fewer still have checked whether it's still accurate.
What does it actually cover?
Contents insurance typically covers loss or damage from events like fire, storm, theft, and water damage. The specifics vary by policy, but in general it covers:
- Furniture and bedding
- Electronics and appliances
- Clothing and personal items
- Kitchenware and tools
- Art, jewellery, and collectibles (often with sub-limits)
Some policies also cover items temporarily removed from the home, like a laptop you take to work.
How is the cover amount set?
When you take out a policy, you nominate a "sum insured": the maximum amount the insurer will pay if everything is destroyed. This is where most people get it wrong.
The sum insured should reflect the replacement cost of all your contents. Not what you paid for them, not what they're worth second-hand, but what it would cost to buy equivalent new items today.
Most people underestimate this significantly.
How to estimate your total
The easiest approach is to go room by room and add up rough replacement costs. Industry data suggests the average Australian household has between $80,000 and $120,000 in contents, though families in larger homes often exceed $150,000.
Here's a rough guide by category:
- Electronics: $10,000 - $30,000 (TVs, computers, phones, gaming, audio)
- Furniture: $15,000 - $40,000 (beds, couches, tables, storage)
- Kitchen & appliances: $5,000 - $15,000 (fridge, oven, cookware, small appliances)
- Clothing & linen: $5,000 - $15,000 (often the most underestimated category)
- Tools & outdoor: $2,000 - $10,000 (garden, garage, sporting equipment)
These numbers surprise most people. That's normal. It's genuinely hard to intuit the total without doing the work.
The bottom line
Contents insurance is one of those things that only matters when something goes wrong. But when it does, the difference between adequate cover and underinsurance can be tens of thousands of dollars.
Take twenty minutes to do a rough inventory. Discuss the result with your insurer. That's all it takes.