Contents insurance covers your household belongings — furniture, electronics, clothing, appliances, and personal possessions — against loss or damage from events like fire, theft, storm, and water damage. It is separate from building insurance, which covers the physical structure of the property.
For renters, contents insurance is the only form of home insurance available, since you do not own the building. For homeowners, it is typically bundled with building insurance as a combined home and contents policy, but can also be purchased separately.
Standard contents policies typically cover loss or damage caused by fire, storm, lightning, explosion, theft and burglary, vandalism, water damage from burst pipes or appliances (not rising floodwater), and impact (for example, a vehicle driving into your house). These are "insured events" — the policy only responds when the cause of loss is on the covered list.
The alternative is "accidental damage" cover, which pays for damage from any accidental cause including drops, spills, and breakages, not just listed events. Accidental damage is either included in premium policies or available as an add-on, and it costs more but covers a broader range of scenarios — particularly relevant for households with young children or expensive electronics.
Gradual deterioration and wear and tear. Contents insurance covers sudden, unexpected events — not gradual breakdown. A washing machine that stops working after 8 years is wear and tear. A washing machine that floods the laundry because a hose bursts may be covered for the water damage, but not for the machine itself.
Mechanical and electrical breakdown. Most policies do not cover appliances that stop working due to electrical or mechanical failure. You need a separate home warranty or appliance protection product for this.
Motor vehicles. Your car is not contents — it needs its own insurance.
Business equipment. If you work from home and have business-owned equipment or stock on the premises, most contents policies exclude or significantly limit cover for business items. Check the PDS and consider a separate business insurance policy if the value is significant.
High-value items above per-item limits. Most contents policies have per-item limits for categories like jewellery, watches, artwork, musical instruments, and sporting equipment. A standard policy might have a $2,000 per-item limit on jewellery. If a single piece is worth $5,000, you are underinsured for it unless you specifically schedule it as a listed item on your policy.
Per-item limits are one of the most commonly overlooked gaps in contents policies. Check the limit that applies to your most valuable single possessions and list them separately if the value exceeds the standard sub-limit.
The sum insured should equal the cost of replacing every item in your home with a new equivalent, not the second-hand value. Contents insurance typically pays on a "new for old" basis — if your 5-year-old TV is destroyed in a fire, the insurer pays for a replacement equivalent TV at today's price, not what the 5-year-old one was worth.
Most people significantly underestimate their contents value when setting up a policy. A practical approach is to walk through each room and estimate replacement cost for everything in it. Common items people forget: books and media libraries, kitchenware and appliances, children's toys and equipment, garden furniture and tools, items in the garage or shed, and clothing (a full wardrobe for two adults typically runs $5,000 to $15,000 to replace new).
| Household type | Typical contents sum insured |
|---|---|
| Single renter, furnished | $25,000 to $50,000 |
| Couple, 2-bedroom property | $60,000 to $100,000 |
| Family home, 3-4 bedrooms | $100,000 to $200,000+ |
These ranges are rough guides. The right figure depends on what you actually own. A household with high-value electronics, a good wine collection, or significant jewellery will sit at the top of these ranges or above.
Standard contents policies cover your possessions at your home address. Items taken outside — a laptop to a cafe, a watch while travelling, a camera on holiday — are generally not covered by a standard policy unless you add "portable valuables" or "personal effects" cover.
Portable contents cover extends protection to items you take away from home, typically for an additional premium. It is worth considering for items you regularly take out — mobile phones, laptops, cameras, and jewellery are the most common claims under this type of cover.
If you rent, your landlord has insurance for the building. That insurance covers the walls, floors, roof, and fixed fittings — not your belongings inside them. If a fire destroys the kitchen and your belongings, the landlord's insurance pays for the kitchen rebuild; your contents insurance pays for your destroyed possessions.
Many renters operate under the mistaken belief that they are covered by the landlord's policy for their personal belongings. They are not. Contents insurance for renters is typically inexpensive — $200 to $500 per year for a furnished apartment — and covers both possessions and personal liability.
If you own an apartment in a strata scheme, the body corporate insures the building structure and common areas. You need contents insurance for everything inside your apartment that is not a fixture — furniture, appliances, and personal possessions.
The boundary between "building" (body corporate's responsibility) and "contents" (your responsibility) varies between strata schemes. Check your strata's insurance certificate to understand exactly where their coverage ends.
Check whether your home and contents insurance is at a competitive price and covers what you actually need.
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