What Is Contents Insurance and How Does It Work?
If your personal belongings are damaged or stolen, contents insurance may cover the replacement costs.
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Written bySarah Archambault
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Experienced personal finance writer
Background working with banks and insurance companies
Sarah enjoys helping people find smarter ways to spend their money. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans.
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5+ years in insurance and personal finance content
Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.
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Table of contents
Contents insurance, also known as personal property coverage, is the portion of a home insurance policy that helps pay to repair or replace your personal belongings when they’re damaged or stolen in a covered event, like theft or fire.[1]
For example, if a fire damages your furniture, contents insurance will generally help pay to replace the affected items. It may also cover belongings outside your home, such as items left in your car.
Understanding the ins and outs of contents insurance is key to selecting the right coverage for you. Here’s a closer look at what contents insurance is, how it works, and who needs it.
Quick Facts
Contents insurance is usually part of a standard homeowners insurance policy.
Contents insurance generally doesn’t cover items damaged through normal wear and tear.
High-value items may require additional protection, known as an insurance rider.
What contents insurance covers
Contents insurance typically applies when your possessions are stolen or destroyed by fire, weather, or other insured disasters.[2] For example, if a fire destroys your furniture or someone steals your TV and laptop from your home, contents insurance will generally help cover the replacement costs.
In the table below, you can see the most common perils that contents insurance covers.
Weather-Related  | Human-Related | Other |
|---|---|---|
| Windstorm | Theft | Fire |
| Hail | Vandalism | Explosion |
| Volcanic eruption | Riot or civil commotion | Smoke |
| Weight of ice, snow, or sleet | Damage by aircraft | Falling objects |
| Damage by vehicles | Water damage from plumbing, heating, or air conditioning |
What contents insurance doesn’t cover
Though contents insurance protects your personal belongings from various perils, it has some exclusions. For example, contents insurance won’t cover items that are damaged due to normal wear and tear, such as replacing an old roof or appliance.
Contents insurance generally doesn’t cover accidental damage either. For example, if you stain your couch or spill a drink on your computer, contents insurance likely won’t cover the damaged items.
But you might be able to purchase coverage for accidental damage as an optional add-on.
Contents insurance coverage limits
Coverage limits for contents insurance policies are usually 50%–70% of the dwelling coverage in your homeowners policy. For example, if your dwelling coverage is $250,000, then your contents insurance would be between $125,000 and $175,000.
Your contents insurance coverage limit is the amount your insurance company will pay toward a covered claim. For example, let’s say your contents insurance has a $125,000 coverage limit and you lose your possessions in a house fire. If it’ll cost $150,000 to replace everything, your contents insurance will cover $125,000, leaving a $25,000 gap.
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Contents insurance sublimits
Contents insurance sublimits cap the amount of coverage you can receive for certain types of losses. These limitations generally apply to your belongings and affect certain personal property categories — particularly high-value items, like jewelry, furs, cash, and coins. After damage or loss, your insurance may only cover you up to a maximum dollar amount.
For instance, a $6,000 stolen coin collection covered under a homeowner policy with $30,000 in contents coverage and a sublimit of $500 for cash and coins would only cover up to $500. Consider adding additional coverage for valuable items to make sure you have full protection.
Contents insurance cost
Contents insurance is part of a standard home insurance policy. A home insurance policy with $300,000 in dwelling coverage and a $1,000 deductible costs $2,511 per year, on average, according to Insurify data.
Your home insurance costs will depend on many factors, including your ZIP code, the age of your home, your home’s square footage, and the value of your personal belongings.
How much contents insurance coverage you need
One of the best ways to determine how much contents insurance you need is to take an inventory of your personal possessions. Creating a home inventory involves making a list of the items you own and keeping receipts, purchase contracts, and appraisals for proof of value.[3]
Another tool to help determine how much insurance you need is the 80/20 rule. The 80/20 rule states you should insure your home for at least 80% of the replacement cost. The same guideline can apply to insuring the contents of your home.
For example, if it’ll cost $50,000 to replace your belongings after a major house fire, you want to make sure you have at least 80% ($40,000) of that amount in contents coverage.
Once you’ve determined the amount of coverage you need, it’s a good idea to shop around to find the right policy for you.[4]
Actual cash value vs. replacement cost
When insurance companies pay contents insurance claims, they typically either pay the actual cash value or replacement cost of an item, depending on the terms outlined in your home policy documents.
With actual cash value, your insurance company pays the depreciated value of your personal belongings.
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For example, imagine a covered loss destroys your refrigerator. Purchasing a brand-new refrigerator of the same make and model would cost $4,000. Since your insurer uses the actual cash value method, you’ll only receive $1,800 — the value of your refrigerator after several years of depreciation.
On the other hand, replacement cost coverage pays to replace damaged items without deducting for depreciation. Sticking with the example from above, if your insurer uses replacement cost, you’d receive $4,000 since that’s how much it costs to replace your refrigerator with one of the same make and model.
Good to Know
Insurance policies that use the actual cash value method are usually more affordable than policies that use replacement cost. But this often results in a lower insurance payout since the value of an item is often lower than the replacement cost.
Riders for high-value items
If you own particularly valuable items, standard contents insurance may not be enough to cover their replacement costs. An insurance rider can help extend coverage beyond your standard policy limits to ensure protection.
Here are a few examples of items you might need a high-value rider for:
Antiques
Collectibles
Fine art
Jewelry
Musical instruments
People with high-value homes (generally defined as homes worth $750,000 or more) may also want to consider additional coverage known as high-value home insurance.
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How to file a contents insurance claim
To file a claim under your home contents insurance, follow these steps:
1. Take an inventory of the damaged property
The first step is to assess and document the damaged or stolen property. The insurance company will need this information to process a claim.
2. Notify your insurer
Since contents insurance is part of your homeowners policy, you’ll need to contact your home insurance company. Explain your situation and ask any questions you have about your coverage or the claims-filing process.
3. Submit a claim
File a claim with your insurance company promptly to get your items replaced as quickly as possible.
Contents insurance FAQs
If you own a home, you should already have contents coverage under your homeowners policy. Consider this additional information about contents insurance to better understand your personal property coverage and how much contents insurance you should carry.
Is contents insurance worth the cost?
Yes. Contents insurance protects your personal belongings and is part of a standard home or renters policy. It can help cover the cost to repair or replace items that are damaged or destroyed, saving you from having to pay out of pocket. But certain types of property, like jewelry, may have lower limits, so check your policy to make sure you have enough coverage.
What does contents insurance cover?
Content insurance covers the cost to replace your possessions if they’re stolen or destroyed by a covered peril, like fire, theft, or vandalism. It applies to clothing, furniture, electronics, sports equipment, and many more possessions.
What company is best for contents insurance?
No single insurance company is the best for contents insurance. When evaluating home insurance companies, look at financial strength ratings, customer satisfaction ratings from J.D. Power, and customer reviews on third-party sites in addition to the company’s available coverages.
Does contents insurance cover mobile phones?
Contents insurance covers theft and damage to your belongings, including your mobile phone. But it generally doesn’t offer protection if your phone is destroyed due to accidental damage, like dropping it in a pool.
Can you claim a broken TV on contents insurance?
It depends. You can file a contents insurance claim for a broken TV if a covered peril damages it, such as a tree falling through your roof and shattering your TV. But contents insurance wouldn’t cover a broken TV that you damaged accidentally or that broke through normal wear and tear.
Methodology
Insurify data scientists analyzed rates from more than 180 home insurance companies sourced directly from Insurify’s partner companies and Quadrant Information Services. Rates span all 50 states and Washington, D.C., and quote averages represent the mean price for a given coverage level and geographic area. To ensure data reliability, only insurers meeting minimum quote thresholds were included in the analysis.
Unless otherwise specified, quoted rates reflect the average cost for homeowners with no prior claims and good credit with a home construction year of 1980. The default coverage assumptions include:
Default Coverage Assumptions
- Dwelling coverage: $300,000
- Deductible: $1,000
- Personal property limit: $25,000
- Liability limit: $300,000
Additional data points beyond these default values are sourced from Insurify’s proprietary database. Rates are updated monthly.
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Sources
- Insurance Information Institute. "Homeowners Insurance Basics."
- Insurance Information Institute. "What is covered by standard homeowners insurance?."
- Insurance Information Institute. "How to create a home inventory."
- National Association of Insurance Commissioners. "A Consumer's Guide to Home Insurance."
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Sarah Archambault
Sarah Archambault enjoys helping people figure out how to manage their finances and credit. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans. Her work has been featured on Credit Karma, Experian, LendingClub, Sound Dollar and USA Today Blueprint. She also writes for national insurers, banks and financial institutions like Aetna, MassMutual, Stripe, and UnitedHealthcare.
Sarah has been a contributor at Insurify since December 2022.
7+ years in content creation and management
5+ years in insurance and personal finance content
Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.
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