Contents insurance

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What is contents insurance?

Contents Insurance is protection for your personal possessions, whether it's in your house or while you travel. Whether you're a homeowner or tenant, contents insurance offers coverage for your things - be it your furniture, your electronics, your clothing, and your art and jewellery. Contents insurance is part of any comprehensive home insurance policy and is the central portion of a tenants insurance policy.

Examples of contents insurance

For homeowners, contents insurance is pre-packaged with your comprehensive policy. Depending on your insurance provider, there are limits, exclusions, and even coverage for things you don't own. Still, because it's an overall umbrella package, the idea to cover everything is considered a best practice.

For tenants, contents insurance and their limits are more defined. You tell the insurer how much contents insurance you need to protect all your valuables. For example, you could have a small wardrobe, an old tv, and a cheap laptop and to replace everything you need $5,000, so you can buy contents insurance for that amount. But, you could have a 4K LED television, a high-end laptop, and rare jewellery - to replace it all could cost $30,000. So, you'd seek that amount of contents insurance. You decide the best contents insurance for you.

Tenants insurance vs. contents insurance

Contents insurance is one component of a tenant's insurance policy. Tenant insurance also includes third party liability insurance protecting you, the tenant, in case someone injures themselves inside your space. It also covers additional living expenses if you need to move out of your space. For example, let's say you're the victim of a major flood or fire, tenant insurance will pay for your accommodations elsewhere while repairs take place in your home.

Tenants are encouraged to buy their own insurance; in fact, some landlords insist on coverage. Without tenant's insurance, If you lose all of your valuables in a fire, those items are gone. Your landlord bears no responsibility for your possessions. That said, a tenant should look at other endorsements (add-ons) to their policy, especially if they live in a basement apartment. Many perils are covered, like damage from a fire or a burst pipe. Still, there are also many exclusions where you wouldn't be covered. For instance, if the main sewer line backs up or if heavy rain is the cause of the flood, you'll want to add a sewer backup endorsement and an overland water endorsement, respectively.

Types of perils in insurance

A peril, or risk, is an event that could damage your home and its property. Common perils protect standard risks in most home insurance policies. They include damage from electrical current, explosion, fire, lightning, smoke damage, theft, vandalism, water damage from a burst pipe or wind and hail damage. However, it's vital to read your policy and understand any exclusions that may exist.

For instance, a comprehensive policy will protect your building and its contents from fire, but does it cover additional living expenses while you're living away from home? If lightning strikes, most policies will cover any related losses. But what if the lightning strike created a power surge destroying your precious electronics - would they be protected? Finally, let's say you're the victim of vandalism and theft. Most policies will reimburse you for any damage, and thanks to your contents insurance, you will be able to replace your valuables. However, there are limits to how much they will give you.

Actual cost value vs. replacement cost

An insurance company will replace your contents. But there are two different ways to do it: actual cost value or replacement cost.

Replacement cost

Replacement cost is the cost to replace your contents with other contents of comparable material and quality. For example, if someone steals your 5-year-old laptop, the claim payout you'll receive allows you to buy a new laptop, with the same features as your 5-year-old model. A replacement cost policy is more expensive, but you'll receive more money to buy the closest comparable items.

Actual cost value

Actual cost value (ACV) is the cost to replace with new contents of like kind and quality, less depreciation. For example, a fire causes damage to your 7-year-old television. Your insurance company will determine the current used resale value of the TV and provide you with that amount as a payout. An actual cash policy is typically a cheaper premium, but you'll likely be paying out of pocket to get the full value back.

Read more on our blog: Actual cost value vs. replacement cost

Contents insurance limits & exclusions

Your home insurance policy will set out specific contents insurance limits and exclusions.

Generally, exclusions include things like glassware, china, collectibles, antiques, or fine arts. Still, you can always insure these items by "scheduling" them with your home insurance provider. Scheduling means you're listing a specific item for a predetermined amount of money, and they'll tell you how much it will add to your premium.

There are also items with special limits, meaning they are covered, but maybe not to the full extent of their value. They include things like bicycles, golf carts, watercraft, jewellery and watches, fur items, silverware, or a wine collection. Again, you can buy extra insurance for these, either with your primary insurer or a third-party insurer. If you do opt for a third-party insurer for one particular item, or set of items, make sure to understand all of the applicable exclusions.

Each insurer will set different limits on each item or collection, so be sure to understand yours, especially if they are valuable to you.

Here is an example from RBC insurance of how they handle content limits.

Property type Maximum coverage limits
Animals, birds, or fish.

$2,500 (for a Specified Peril other than Impact)

Business property on-premises (excluding other property used for business such as samples and goods held for sale).

$2,500

Collectibles, such as sports cards, sports memorabilia and comic books.

$5,000*

Each bicycle, tricycle, unicycle or e-bike and its equipment and accessories.

$1,000*

Garden type tractors and snow removal equipment including attachments and accessories.

$10,000

Golf carts

$5,000

Golfing equipment and accessories, except golf carts, while the golfing equipment is away from your premises.

$3,000*

Jewellery, watches, gems, fur garments and garments trimmed with fur.

$6,000 (extension available to $10,000)*

Manuscripts, stamps and philatelic property, (such as stamp collections).

$2,000*

Money, including cash cards or bullion.

$500

Numismatic property (such as coin collections).

$500*

Personal property contained in a safety deposit box in a Bank or Trust Company

$10,000

Personal property of a student who is temporarily residing away from home to attend a school, college or university.

$10,000

Personal property of physically or mentally challenged persons who are legally in your custody, while residing in a care facility for such persons.

$5,000

Personal property of your spouse, father or mother (or spouse's father or mother) who is living in a nursing home or home for the aged, but who are in your legal custody.

$5,000

Renewable energy equipment.

$5,000

Securities

$5,000

Spare automobile parts

$250 per item; $1,000 maximum

Watercraft, their trailers, furnishings, equipment, accessories and motors (we do not insure personal watercraft powered by a jet-pump propulsion system).

$2,500

Wine and spirits on-premises

10% of Contents Coverage as shown on the Certificate of Property Insurance

Wine and spirits off-premises

1% of Contents Coverage as shown on the Certificate of Property Insurance

Note: Limit does not apply when the wine is stored in the cellars of a wine club or similar location.

Works of art, such as paintings, photographs, drawings etchings, prints and lithographs, including their frames, sculptures, statuary and antiques, and hand-made rugs and tapestries

$15,000 per item; up to a maximum of 15% of Contents Coverage as shown on the Certificate of Property Insurance for all item

Common home insurance endorsements for content

How much contents insurance should I have?

Knowing how much all your contents are worth, what you want to insure it for, and all the added protection will help you determine how much contents insurance you should get. The best way to understand the worth and value of all your belongings is to create a home inventory.

A home inventory is an itemized list of all your belongings and their relative value. Ideally, for the best claims experience, you’ll want to have pictures and receipts of all the items on your home inventory.

You can either create your home inventory checklist with a pen and paper and have a digital backup somewhere, or, as you probably guessed, there’s an app for that. Our recommendation at Ratehub.ca is to go with Sortly. The app allows you to list 100 items, with up to 8 images of each, all for free. If you need to make a claim, having all this data backed up will make the process a breeze.

How to make a contents insurance claim

1

Call your insurance company

Either by phone or connect with them online as soon as reasonably possible after the event occurs. You'll want to understand what to do, and more importantly, what not to do right away. Ideally, you'll take photos and have your itemized list ready to go. Don't throw anything out unless you have a quality photo of it and your insurer has said it's ok to do so.

2

Create and submit your claim

You'll fill out all the necessary paperwork, and they'll give you a claim number to track its progress. List out all the contents that are insured and for what you're claiming. Again, photos and receipts are essential to a hassle-free claims process.

3

Gather your estimates

Your insurance provider will send out a claims adjuster to assess the damage and provide an estimate or recommend a contractor to help you out. Getting your own estimates from a third-party will still prove valuable because you’ll have ideas on what things will cost and their estimated turnaround time.

4

Hire an approved contractor

Your provider may send you a list of contractors they insist you use, and if so, you want to make sure that they'll do a good job and complete the repairs up to your specifications. Update your insurer regularly with details of the rebuild and disaster recovery.

5

Make the payments for your repairs

After the claim is processed, your provider will notify you and either send a cheque directly to you or the chosen contractor. They may pay you in one lump sum or in multiple cheques. Keep track of everything.

6

Complete your repairs and buy your replacement items

Don’t let it lag behind and always keep in touch with your insurer if you’re unsure about anything.

Other helpful resources for contents insurance

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