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In New Zealand, if you only insure your most expensive belongings and a fire destroys everything you own, you generally have to pay to replace everything else yourself. The good news is that you may be able to arrange contents insurance that protects all your belongings without having to insure each item individually or pay to cover every item for its full replacement value.

Here's how it works and what you can do if money is tight.

1. What happens to your belongings after a fire?

It depends on the type of insurance you have.

• If you insure only specific items: If your policy covers just your laptop, jewellery and television, for example, those items may be covered if a fire damages or destroys them. Your clothes, furniture, kitchenware and other possessions generally won't be covered unless the policy includes them.
• If you have contents insurance: This generally covers your household possessions against insured events, including fire. Depending on your policy, you may be covered for furniture, clothing, appliances, bedding, electronics and other belongings.
• If you have no contents insurance: You generally have to pay to replace your belongings yourself. Your landlord's insurance, if you're renting, normally covers the building rather than your personal possessions.

Important: You don't necessarily need to insure individual belongings separately. Many contents policies cover your possessions collectively, up to a total sum insured.

2. Can you insure only your most valuable belongings?

Yes, but there are two different approaches.

Option A: Insure specific valuables. You insure selected items, such as jewellery, computers or musical instruments. Depending on the policy, the cover may apply only to those items, leaving your other possessions uninsured.

Option B: Get basic contents insurance. You insure your household belongings collectively, up to a total dollar limit. You can choose a lower level of cover to reduce the premium, although you'll need to make sure the limit is enough for the losses you want to protect against.

For example, imagine you have:

• Laptop and electronics: $4,000
• Bed, sofa and other furniture: $5,000
• Clothes and shoes: $3,000
• Kitchenware, linen and other belongings: $3,000

Your total contents are worth approximately $15,000 to replace.

If you insured only your $4,000 worth of electronics and a fire destroyed everything, you could potentially claim for the covered electronics, but you would be left to replace the other $11,000 yourself.

With contents insurance covering $15,000, you could potentially claim for all those belongings, subject to the policy's conditions, exclusions, limits and excess. You can read more about these options in Consumer NZ's contents insurance guide.

3. What if you can't afford to insure everything?

You have a few options worth considering.

• Look for basic contents insurance. Some policies focus on major events such as fire and theft rather than offering broader accidental-damage cover. This may be a better fit for your budget.
• Choose a realistic sum insured. Work out how much it would cost to replace the essentials, including clothes, bedding, furniture and appliances. Don't forget that replacing everything at once can be expensive.
• Compare the excess. A higher excess can sometimes reduce your premium, but you would have to contribute more towards a claim.
• Check temporary accommodation cover. If a fire makes your home uninhabitable, some contents policies help pay for temporary accommodation. This can be particularly valuable if you're renting.
• Check limits on expensive items. Jewellery, watches, artwork and other valuables may have individual limits, even when you have contents insurance.

Consumer NZ recommends choosing the highest level of cover you can afford that suits your needs. Its guide also explains the differences between basic and comprehensive policies. Read the guide here.

4. What if you're renting in New Zealand?

If you're renting, your landlord's building insurance generally won't cover your personal belongings.

Contents insurance can protect your possessions, and some policies also help with temporary accommodation if your rental becomes uninhabitable following a covered fire.

You can read more in Consumer NZ's guide to contents insurance for renters.

My recommendation

If money is tight, I'd investigate basic contents insurance that covers fire before buying insurance for individual belongings.

Think about what would happen if you lost everything in one night. Even if your individual possessions aren't particularly expensive, the combined cost of replacing your clothes, bed, furniture, kitchen equipment and everyday essentials could be substantial.

You don't necessarily need the most comprehensive policy. The important thing is to find affordable cover that would help you recover from a major loss.

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Can I ask you one question?

Are you renting or do you own your home?

That makes a difference to which insurance options are most relevant to you in New Zealand, and I can explain the most affordable approach for your situation.