In today’s article we are going to discuss contents in multi-risk insurance policies. First of all, let us define what contents means.
What Are Contents? Definition
Although each insurer defines it differently, most agree on what they call contents or furniture. They usually refer to contents or furniture as the part of insurable property made up of decorative objects and movable goods that are owned by the insured party and are permanently installed in the home, business premises, warehouse, homeowners’ association and so on, depending on the insurance line we are referring to.
Examples of Contents or Furniture
As mentioned at the start of the article, the concept of “contents” is used in different types of multi-risk policies. Let us look at a few examples.
Contents in Home Insurance
Home insurance policies are usually structured around building and contents. Contents are made up of furniture, such as beds, sofas, tables and chairs, as well as appliances, decorative items such as paintings and lamps, household goods, clothing and similar items.
Contents in a Commercial Multi-Risk Policy
In shop insurance, contents are usually divided into furniture and stock. Furniture includes shelves, counters, chairs and tables, while stock is treated separately.
Stock consists of the goods stored in the commercial premises for sale.
Application of the Proportional Rule: Underinsurance in Contents
In policies such as home insurance, contents are often valued at “total value”, meaning we must calculate their value and state that value in the policy.
If the value insured in the policy is lower than the value calculated by the insurer in the event of a claim, the proportional rule will be applied. The insurer will indemnify in the same proportion as the contents value was insured.
In other types of policies, such as shops or SMEs, it is more common for contents to be insured on a first-loss or partial-value basis. This avoids the possible application of underinsurance.
Common Exclusions for Contents or Furniture
As always, we recommend reading the general conditions of policies before taking them out. The conditions will detail what is excluded from this type of insurable property, whether contents or furniture. In some cases, banknotes, stamps, deeds or animals may not be covered as part of the contents.
Some insurers also set a percentage limit of the policy’s furniture value for professional-use goods or for objects kept in gardens or garages.
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