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If you're on a tight budget in New Zealand, I'd generally keep enough contents insurance to replace the things you couldn't realistically afford to replace yourself after a fire, burglary, or major disaster. You don't necessarily need the highest level of cover, but dropping it altogether can leave you financially exposed.

The goal is to find the cheapest policy that protects you from a financial setback you couldn't recover from easily.

1. What level of contents insurance is worth keeping?

I'd think about it in three levels:

Level of cover	What it means	My view on a tight budget
Basic, lower-value cover	Covers essential belongings up to a relatively low limit, subject to the policy terms.	Worth considering if money is very tight. Check that the limit would actually replace your essentials.
Mid-level cover	Covers most everyday belongings, furniture, appliances, clothing and electronics.	Often the best balance between cost and protection.
High-value cover	Higher limits for belongings, valuables and potentially additional benefits.	May be unnecessary if you don't own expensive items, collections or specialist equipment.

One important distinction: a policy with a low total limit isn't necessarily good value if it wouldn't cover the cost of replacing your belongings. Also, insurers differ in what they cover, the excess you must pay and the conditions attached to claims.

2. What I'd keep if money is tight

If I were trying to cut costs, I'd prioritise cover in this order:

1. Fire and major-event cover. A fire could destroy nearly everything you own at once. Ask your insurer whether it offers a cheaper policy that covers major events without all the benefits of comprehensive cover.
2. Burglary and theft. Replacing a laptop, phone, clothing, furniture and appliances all at once can be expensive.
3. Replacement value for everyday essentials. Check whether the policy pays enough to replace your belongings with new equivalents or only their depreciated value.
4. Temporary accommodation. If a fire or another insured event makes your home uninhabitable, this benefit could help with accommodation costs. Check the policy limits and exclusions.
5. Accidental damage. This is a benefit I'd consider reducing before giving up protection against a catastrophic loss, provided the savings are worthwhile.

Consumer NZ recommends getting the highest level of cover you can afford that suits your circumstances. It also suggests asking about fire-only or fire-and-burglary policies if comprehensive insurance is unaffordable. Source: Consumer NZ's insurance buying guide.

3. How much cover do you actually need?

Rather than picking an arbitrary insurance amount, estimate what it would cost to replace your belongings.

Include:

• Beds, mattresses, sofas and other furniture.
• Clothing, shoes, bedding and towels.
• Fridge, washing machine and other appliances you own.
• Phones, computers, televisions and other electronics.
• Kitchen equipment, crockery and everyday household items.
• Tools, bicycles, sporting equipment and other possessions.
• Any valuable jewellery or special items that may need to be listed separately.

Don't just add up what you could sell everything for second-hand. If your policy provides replacement cover, you generally want to estimate the cost of buying equivalent items new, subject to the policy terms.

You can use NZI's contents insurance calculator as a starting point. If you're flatting, count only the belongings you own. Source: NZI.

4. Four ways to lower your premium

Before cancelling your policy, try these options.

Option	What to consider
Increase your excess	A higher excess can reduce your premium. Choose an amount you could actually afford to pay after a loss.
Switch to basic cover	Ask whether a policy covering major events, fire and theft would be significantly cheaper than comprehensive cover.
Compare insurers	Compare the premium, excess, replacement terms, exclusions and limits—not just the headline price.
Remove unnecessary extras	Check whether optional benefits are worth their additional cost for your circumstances.

Consumer NZ notes that some policies have substantially different benefits and limits, so the cheapest premium isn't necessarily the best value. Read its buying guide.

One important caution: don't reduce your insured amount below the realistic replacement cost just to make the premium cheaper without understanding the consequences. You could end up with a substantial shortfall after a major claim.

5. When might cancelling contents insurance make sense?

Cancelling could be a reasonable last resort if:

• You own very few possessions.
• You have enough savings to replace everything you own.
• The premiums are genuinely unaffordable, even after comparing cheaper policies.
• You understand and accept the risk of having to replace your belongings yourself.

However, even people with modest possessions can find that replacing everything after a fire costs far more than expected.

If you're renting, contents insurance is generally separate from insurance for the building itself. Don't assume your landlord's insurance will replace your belongings.

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Let me help you work out what's worth keeping

I can give you a more practical recommendation if you tell me just two things:

1. What's your living situation?

• A. Renting or flatting
• B. Own your home with a mortgage
• C. Own your home outright

2. What's your main budget concern?

• A. The premium has become too expensive, and I need to cut it.
• B. I'm deciding whether to keep insurance at all.
• C. I want to reduce my cover to the cheapest sensible option.

With those two answers, I can suggest what I'd prioritise keeping, what I'd consider dropping, and where I'd look for savings in New Zealand.