A major insurer has been responding to queries recently about how home contents might be covered when people are away from home and storing them long-term, particularly in rented storage units.
According to IAG national claims technical specialist Chris Kiddey, it could be considered reasonable to expect that people could put their belongings in a secure storage unit and then come back a year later to find them exactly as they left them.
“Unfortunately, that’s not always the case,” he explained.
He described how a customer outlined to IAG that he intended to sell his house and take a long trip before finding a new one. The customer’s query was whether in the interim his usual contents insurance would cover his contents in storage in the interim.
The response – probably not.
“The typical contents policy covers personal possessions only while they are in a house or temporarily removed from there,” said Kiddey. “Once possessions have been moved away permanently, they’re neither at the house nor temporarily removed. Furthermore, many policies have strict limitations or exclusions related to storage, transporting and certain other things.”
AMI’s advanced contents policy states that there is no cover when household contents are: permanently removed from a house; in transit, during permanent removal, except for the cover provided under ‘transit cover’; permanently or temporarily removed from a house for sale or exhibition; or when removed from a house for permanent or temporary storage.
As to why such limits exist, it is a result of risk, said Kiddey, because when contents are within an insured’s walls, they are generally quite safe.
“Sure, burglaries and fires and other things happen – that’s why you have insurance after all – but the big losses are actually pretty rare and there are fewer ‘unknowns’,” he said.
“When possessions are in storage, by definition they are not personally used or cared for in the same way.”
Kiddey advised resolution of the situation by the selection of a specific ‘contents in storage’ policy. “Sometimes, the usual contents insurer will amend an existing policy to provide some cover,” he said.
He added that people using a professional carrying or moving company have the option of finding out what insurance is available for transit and storage from the company.
Kiddey stressed though that even though a person can get additional cover it could come at a price as a result of the risk involved and not cover as many kinds of damage as that of usual contents cover.
To make things clearer Kiddey pointed to a typical ‘contents in storage’ endorsement. He said that it is often called a ‘defined perils’ policy in which only listed perils are covered. “So, for example, there’s no cover for any kind of vehicle impact damage or damage caused by unexplained disappearances – only what is seen on the list,” he said.
He added that gradual damage and damage by rodents are categorised under normal contents policy exclusions and that this uninsured damage can occur undetected in some storage situations.
He further noted that only listed perils are covered because even though IAG wants to make insurance generous and reasonable, it has to keep it affordable and therefore is unable to cover everything.
“It’s about risk. People can probably find a policy with broader cover contents in storage, but they’ll always pay for what they get,” he concluded.
Insurance Business will follow up with what Kiddey has to say on storage company insurance cover soon.
IAG NZ reveals common causes of confusion
Five Minutes With… Chris Kiddey, IAG