What Is Contents Insurance?
What contents insurance covers
Personal property covered by contents insurance includes:
The limit of contents coverage is typically expressed as a percentage of your dwelling coverage limit. For instance, if your dwelling coverage is $500,000 and your content coverage is 50% of that limit, your homeowners insurance will cover up to $250,000 to replace items damaged or destroyed due to a covered peril.
Contents insurance covers property both on and off your insured premises (i.e., your house), but off-premises coverage is typically subject to a separate, lower coverage limit.
Contents insurance only covers sudden, accidental damage or loss caused by a covered peril, such as fire or theft. You can check your policy documents for a list of causes of loss excluded from your coverage.
Your contents insurance policy is subject to your home insurance policy deductible. You’ll need to pay the deductible in full before insurance kicks in to cover the remainder of your personal property claim.
What is not covered by contents insurance
Contents insurance does not cover the structure of your home, outbuildings, or other structures on your property. This type of insurance also won’t cover built-in furniture and appliances, such as:
In addition, contents insurance may not cover the full value of certain high-value items, including jewellery, bicycles, animals, collectibles, and sporting equipment. Check your policy details to see which of your personal belongings are subject to per-item limits and consider adding an endorsement, if necessary, to cover the full value of your property.
If you have hard-to-insure items like jewellery, art, or collectibles, ask your insurance company about adding one or more endorsements to your policy to extend your coverage for those items. Options may vary, so you may want to compare contents endorsements from multiple insurers.
How much contents insurance do you need?
Contents insurance is generally written as a percentage of your home’s dwelling insurance—usually 50% to 80% of dwelling coverage. You can estimate your coverage needs by creating an inventory of all the personal property in your home.
To make a home inventory, you can:
- Do a video walkthrough of your home: A video inventory can be a simple way to capture information on your belongings for future insurance claims.
- Create a list: Take note of every item in the room and enter it on a checklist or spreadsheet (the Insurance Bureau of Canada offers a helpful template).
- Look for invoices or receipts from big-ticket items: Don’t remember how much your couch cost? Dig up the bill to put an exact number on your inventory.
- Keep records every time you purchase a new item: Buying a new set of golf clubs? Upgrading your wardrobe? Make sure the receipts end up in a dedicated folder (physical or digital) so that you can prove their value to an insurance adjuster.
- Get high-value items appraised: Collections, antiques, or family heirlooms can be inspected by a professional to get an official record of their insurance value.
- Include as much detail as possible: A detailed inventory helps to insure that your belongings are replaced with items of comparable value and function. Brand names, price details, receipts, and the name of the store where you bought the item can all help to ensure a fair replacement.
Having a detailed home inventory can help you understand your coverage needs when you buy home insurance, and it can streamline the home insurance claims process if you ever need to call on your contents coverage after a fire, storm, break-in, or other loss.
According to the Insurance Bureau of Canada, personal property claims—including contents claims—make up a growing percentage of home insurance claims in Canada. Prepare for rising risk by making sure that your policy has the right amount of contents coverage before you need to submit a claim.
Replacement cost vs. actual cash value
Your contents insurance may cover your belongings using one of two methods:
- Replacement cost (RCV): This policy will cover the full cost to replace your items with similar items of like kind and quality.
- Actual cash value (ACV): This policy will cover your belongings’ replacement cost minus depreciation
If your contents insurance specifies RCV coverage, insurance companies must replace your lost belongings with items of “like kind and quality,” but it’s on you to define what that means. When making a home inventory, be as specific as possible about the brand, style, function, and value of your property to avoid seeing your high-value items replaced with cheaper, less functional versions.
For example, if your home inventory simply says “TV” and you have no record of the exact value, size, brand, or function of that TV, you could see your 83-inch OLED smart TV replaced with a basic 32-inch TV.
Covering high-value items: Endorsements and floaters
Standard contents coverage includes per-item sub-limits for high-value personal property such as jewellery, art, and collectibles. These sub-limits may be referred to as “scheduled personal property endorsements” or “valuable property floaters
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Many insurers set the standard limit for high-value contents coverage at $6,000, with the option to raise limits to $10,000. If you need higher limits or need multiple floaters or endorsements for different categories of high-value property, you may need to speak with a broker or advisor to set tailored limits for each piece of property.
How to compare contents insurance options
To compare options for contents coverage, you may want to:
- Weigh replacement cost vs. ACV: While replacement cost can result in a larger payout, a policy that only covers your property’s cash value could reduce your home insurance premiums and save you money.
- Consider additional coverage options: You may need endorsements or “floaters” to cover high-value items.
- Get quotes from multiple companies: It’s typically a good idea to request home insurance quotes from at least two to three insurance providers to find the best pricing for your needs.
The cost of contents insurance depends on your overall policy deductible, the percentage-based coverage limit for personal property, replacement cost vs. ACV, your location, and the number and value of scheduled personal property endorsements you add for high-value items. Working closely with a broker to tailor your coverage and bundling and home auto insurance can help to reduce costs without sacrificing financial protection.
FAQ: Contents insurance
This article is for general information only and is not insurance or legal advice. Examples and any sample quotes or rate ranges are illustrative and do not constitute an offer or guarantee of coverage, price, or eligibility. Actual coverage, discounts, and premiums depend on your individual circumstances and the insurer provider; if there is any discrepancy, your policy and insurer documentation govern. For advice about your situation, speak with one of our licensed insurance professionals.