What Is Buildings and Contents Insurance?

Building and contents insurance is a term describing personal coverage very similar to business property coverage. Building and contents covers not just the property you live or work in but also the valuables inside. When your home is damaged in a natural disaster, electric fire, break in or other unforeseen event, building and contents coverage will replace your home and the valuables inside.

How Much to Elect

Each individual will have different needs and ability to pay for insurance. The two main factors are your budget and your exposures.

  • Your budget - The first thing to consider is how much you can afford to pay out of pocket in case of an emergency. Paying for these damages yourself up to a point is typically much cheaper than filing an insurance claim and paying the premiums. You will also want to consider how much you can spend each month in premium.

  • Your exposures - The area you live in will determine the majority of your exposures. High risk areas may be either geographically predisposed to natural disasters or demographically exposed to high crime. In both cases, you will need more coverage. The value of your home and its contents will additionally be a large factor in how much risk you are exposed to.

What is Covered

Most people will have contents coverage for furniture, appliances and other goods inside the home. The most common elements covered in building and contents insurance are those that are semi-permanent fixtures in the home. If you have an expensive refrigerator, television or pool table, your contents coverage will cover these items. You may also need to detail the cost of the finishes in your home, such as expensive marble or woods used in the building process.

When you increase the value of your property by adding more of these expensive finishes, it is important to have your home's value reassessed and report this to your insurer. Your insurer will also recommend you take photographs of any item of significant value in your home. These photos should be placed in a fire-proof safe or off-premise. Having photos of each room in your home may seem tedious, but you will be thankful if you ever need to report a claim and exemplify the damage done.

Protecting Certain Valuables

If you have individual, high priced valuables, you may need to elect unique coverage for these items. The most common items needing unique coverage are: jewelry, watches, family heirlooms, antiques, art and firearms. Any item over your per-item limit on your policy will need to be reported separately. You will traditionally need to have these items independently appraised in order to report their value on a building and contents policy. You may also consider having a separate insurance policy just for these high-price items. These separate policies may cover theft and loss or damage when the traditional building coverage policy will not. Ultimately, having items valued over a few thousand dollars each will mandate a number of dedicated insurance dollars to protect these assets.