Do you have home contents insurance?

[Kitties are the best]

Hey guys,

How many of you don't pay for home contents insurance and what's your rationale?

Here is my situation. I own a mortgaged inner city Melbourne unit in a relatively low crime suburb. I have buildings insurance as part of my body corporate fees.

I live by myself and my apartment is furnished fairly cheaply. The most expensive thing I have bought is a new $1,600 fridge  (before I found this website and realised I could have bought a nice one year old fridge on Gumtree for $500). I am not a 'stuff' person and have few belongings I would miss if my building burnt to the ground. I also have enough accessible cash to replace everything in my apartment.

I have not bought contents insurance in the last two years. This feels irresponsible somehow.

I've just got a contents insurance quote for $400 a year and I am debating whether to take it on. This isn't a huge amount of money but I'll be honest - I'm sort of anti insurance. The two times in my life I have tried to claim on insurance (once was travel and once was contents) - I wasn't covered for different reasons. I kind of feel that most of the times insurance companies are very happy to take your money and extremely wary about letting you claim anything.

What are your thoughts on home contents insurance?

[Fresh Bread]

We're thinking of cancelling our contents insurance for similar reasons - there isn't a lot of value at our place that couldn't be replaced easily. Things like replacing passports that are a complete PITA aren't made any easier by having insurance. It doesn't cover your photos and things of sentimental value.

We claimed once for bikes stolen from an apartment garage but we've paid much more in premiums over the years than we got back or ever would in the future.  In retirement we'll be around quite a bit or if we're travelling we'll have our good stuff like laptop, phones etc with us. We're in a low crime area where neighbours don't generally lock their houses or cars and there's zero bush fire risk. The only other time someone tried to burgle us (in another suburb) was at night and they took the car keys but couldn't drive our manual - they took off with just our wallets once we woke up! Again - no claim on insurance there, just a lost night's sleep cancelling cards.

Having said all that, there's the risk that if you or someone else in your block has a fire or flood, you might need to replace carpets or maybe your kitchen and appliances all at once, and that could be an expensive exercise if they weren't already ropey and due for a change. I can't remember all the ins and outs of strata coverage so it would be worth double checking.

Overall, our intention is to self insure by having a stache - this is for our home contents, car (except CTP, no getting out of that!) and private health for occasional elective ops (and go Medicare for the rest). 

[mustachepungoeshere]

I'm covered for about $30k worth of contents at a cost of about $350 per year.

My only suggestion would be if you take it out, take a few precautions to minimise the chance of the insurance company denying your claim.

Photograph everything - every room in your house, valuables, appliances, serial numbers. Photograph or scan receipts of anything you would be likely to claim. And save emailed invoices/receipts of anything you have bought online. Store it in Google Drive or similar.

One of the big challenges with contents insurance claims is proving ownership.

A friend's house was burgled and the insurance company refused to pay out on most of his model cars (he had dozens, all costing $250-$500 each) as he couldn't prove ownership.

[lr]

This is a question of math and risk. Will you be ruined financially if your stuff burns down? Are you at much higher risk than the insurance experts predict?  If both are no, put your $400 in a savings account and call yourself self-insured, which sounds very responsible. 

Then buy some fire extinguishers and a jar to keep your candles from tipping.

[HappierAtHome]

I didn't bother having contents insurance when I was in an almost identical situation to yours. My rationale was that there was nothing I couldn't afford to replace. If everything had been stolen or burned down, other than some sentimental value for certain items it would have just been a good opportunity to practice minimalism.

Now that I'm in a house instead, and contents insurance was a very minimal cost added-on to home insurance ($100 a year, if that!), I do have it.

[Playing with Fire UK]

I didn't have contents insurance for years - I was happy to self-insure. I changed when SO wanted to get insured (different risk appetites). Many people thought that I was irresponsible but I knew that I could afford it.

Is the $400 quote the highest deductible you can find? Would you expect it to reduce after a couple of years without a claim?

The other way that I look at a bunch of DIY stuff is: 'is dealing with an insurance company/decorator/plumbing/interior designer/lawyer actually going to make the process easier or harder'. 

The time I had medical travel insurance and had a minor incident; I started the claim but then gave up under the weight of forms and evidence that the company needed me to provide. If I'd realised this earlier I would have gone for a much higher deductible and lower cost policy and wouldn't have bothered with the claim.

With your experience maybe you would feel the same (ie before replacing whatever was damaged/taken having to get the approval of the insurance company).

[ysette9]

I think the purpose of insurance is to protect yourself from the unlikely events that you would be unable to cover yourself or would significantly impact your financial security. Since we own very little of value and I am not really into 'stuff' anyway, if we lost everything it would not be crippling. Sure, it would be annoying, but almost everything could be replaced via trips to Target/Ikea/Craigslist. The things that I would miss would be my instruments (could be replaced but it wouldn't be "the same"). The things we absolutely would be devastated to lose are the contents of our laptop hard drives and my toddler's stuffed lion lovey. To reduce risk on the first front we have multiple backup drives scattered around the house and in the safe. On the second front we have multiple lions and cross our fingers that no one wants to steal him! :)

[Kitties are the best]

Thanks guys. It's really helpful to hear from you. Especially the points re. keep receipts for everything - most things I don't have receipts for so I imagine there would be a lot of things that I could not claim for if I needed to.

I also read through all the exclusions in the policy I got the quote from - they had over four pages of exclusions!!

I am going with my first instinct - which is that home contents insurance in my situation is bad value. I'll re-assess if I ever buy a home or have a live in partner who wants it. At least I have a rationale for why I don't have contents insurance now :)

[gooki]

I'd drop our contents insurance, but the cost is so low I'm happy to pay. $200 per year for $40,000 cover. And due to combined insurance (house and contents with same company) this reduces our house insurance by $100 per year, so effectively it's costing me just $100 per year for contents cover.

Like you low crime area. My main concern is fire, high earthquake zone, electrical shorts due to earthquake movement isn't unheard off.

[mskyle]

My main concern is also fire. We have renters' insurance, which covers our belongings and also includes some liability insurance, and I think it's about $160 (US) a year (I don't know if "contents insurance" is a thing in the US). I would probably be willing to pay twice that much. Sure, I *could* afford to replace everything in my home if the house burned down. But oh, wow, would that ever suck!

The most expensive thing I have bought is a new $1,600 fridge  (before I found this website and realised I could have bought a nice one year old fridge on Gumtree for $500).

When you want/need to replace everything at once, though, it's a lot more expensive than gradually accumulating stuff over the years. Like, we waited until our sofa went on sale and we had a coupon, and we timed the purchase to go with the opening of a new credit card that had a cashback bonus if you spent a certain amount in the first three months. Several other pieces of furniture were free or low-cost from friends or yard sales or whatever. Likewise clothes - building a whole new wardrobe from scratch over a period of a month or two would be interesting, but also a huge pain in the ass and probably expensive.

If everything in your home were damaged in a fire (or earthquake, or whatever extreme thing happens where you are), what would it cost you to get back on your feet again - to have enough clothes to get you through the week, something to sleep on, etc.?

I don't know how it works in Australia compared to the US but detailed descriptions (with brands, etc.) go a long way with a US insurance company, even if you don't have the actual receipt.

[NextTime]

I own a condo so it is basically renter's insurance.

I pay $199/year for $20k in personal property with $1k deductible, as well as various other things (dwelling, loss of use, fungi, etc).

It also provides $300k in personal liability insurance.

I haven't seen the group policy in awhile. For those in the know, does the group policy usually cover personal liability? If not there is a good reason right there to purchase a cheap renter's insurance policy.

[Kitsune]

We've got it included in our policy for 2 reasons.
1) Fridges, stoves, general appliances, beds for 4, professional clothing to keep working, etc: all expensive to replace, and if you're starting from scratch that's an expensive outlay.
2) It would reduce my yearly house insurance by 150$. At that point...

[cchrissyy]

I've had 2 home burglaries in the last decade where it paid to have the insurance. One as a renter, one as a homeowner. 

I'm not in AUS, but here, contents coverage is really cheap, and when I called for quotes I found that changing the deductible or the amount covered had very little impact on how cheap it is.

And theft is not really the point, although I definitely got my value out of the insurance both times that happened. The real risk would be if my house burned down and I needed to replace everybody's clothes, furniture, electronics, etc.

[merula]

US-based insurance underwriter here with a few things to add specific to how the US and Australia differ.

In the US, you typically can't separate your "contents insurance" from building for your home or liability insurance. Like, I just bought a new house and I was required to have a "personal property" limit equal to 75% of the building limit. That's ridiculous, since I could replace everything in my house twice over with that amount, but it's standard.

Second, "renter's insurance" in the US is basically coverage for your contents plus liability coverage, and it's usually super cheap. Like, $10-20/month depending on your limit.

Finally, I wouldn't go into any property insurance transaction expecting to get out what you paid in. The nature of insurance is such that a lot of people won't file any claims and some will file claims worth well over what they paid in premium. If you don't have a claim, you paid for the peace of mind. If you don't want to pay for that peace of mind, feel free to self-insure.