What is contents insurance and how does it optimally protect your business?
12 Jun 2025
9
Minutes
Katrin Straub
CEO at nextsure
An unforeseen damage to your operating equipment can quickly become a threat to your existence. Learn how contents insurance protects your business from the financial consequences and helps you resume operations quickly.
The topic in brief and concise terms
A contents insurance policy protects a company's movable operating equipment, goods, and inventory from financial damage caused by fire, tap water, storms, hail, and burglary.
The accurate determination of the insurance sum at the new value is crucial to avoid underinsurance and thus financial disadvantages in the event of a claim.
Additional components such as natural hazard, glass, or business interruption insurance can customise and extend coverage to meet the specific needs of the company.
Understanding the key aspects of content insurance
The contents insurance is a commercial property insurance specifically designed to protect the movable items of your business. This includes, for example, office furniture, technical equipment, machinery, goods, and supplies. It covers damage caused by defined risks such as fire, water leaks, storms, hail, or burglary. Many entrepreneurs underestimate the risk that even a single incident can lead to costs of tens of thousands of euros. The sum insured should correspond to the new value of the entire inventory to avoid underinsurance; experts often advise setting the sum at least ten percent above the calculated value. A distinction from private household insurance is important here, as contents insurance is tailored to commercial risks. Having a precise understanding of the insured risks and exclusions is crucial for comprehensive protection.
Scope of services and insured risks in detail
Contents insurance typically covers damages caused by a range of standard hazards. These include fire, such as from a blaze or an explosion, and water damage from a burst pipe. Storm and hail damage are generally covered as well, often with a minimum wind force defined for storm damage. Another key component is protection against burglary, robbery, and vandalism following a break-in. A common claim is the theft of laptops and other technology, which can quickly incur costs of over five thousand euros. In the event of a claim, the insurance covers not only the costs for repair or replacement of the damaged or stolen items at their new value but often also cleanup and demolition costs, relocation and protection costs, as well as the costs for restoring business documents. It is important to check which additional components are sensible for your business.
The following costs can typically be covered:
Repair costs for damaged items up to an amount of, for example, 2,500 euros.
Replacement costs for destroyed or stolen items at their new value.
Cleanup and demolition costs, which often amount to up to ten percent of the insured sum.
Costs for temporary security measures after a break-in, such as changing locks for about 300 euros.
Relocation and protection costs if other items need to be moved to mitigate damage.
Fire extinguishing costs, which can quickly reach several thousand euros.
These services help make the operation quickly functional again after a loss.
Meaningful additional components to optimize your protection
The basic coverage of a contents insurance is often not sufficient to cover all the specific risks of a business. Therefore, insurers offer a range of additional modules. An important addition is protection against natural hazards, covering damage caused by natural events such as flooding, backwater, earthquakes, subsidence, landslides, snow pressure or avalanches. This module is sometimes essential, particularly for businesses in high-risk areas, as flood damage can quickly lead to costs exceeding 50,000 euros. Glass insurance can also be useful to cover breakages to business glazing, such as shop windows or glass doors. For companies with a lot of electronics, a separate electronics insurance is often advisable as it covers operating errors or power surge damages, which are beyond the protection of a standard contents insurance. A business interruption insurance is another important module that compensates for lost profits and ongoing costs during an operational shutdown following an insured material damage.
Determine the correct insurance sum and avoid underinsurance
Determining the correct insurance sum is a crucial aspect of contents insurance. It should reflect the replacement value of all insured items, meaning the amount that would need to be spent to acquire new, similar items. Setting an insurance sum too low leads to underinsurance. In the event of a claim, the insurer would then only pay out proportionately, even if the damage is below the insurance sum. For example, if the value of the inventory is 100,000 euros but the insurance sum is only 70,000 euros (i.e., seventy percent), then damages will also be reimbursed at only seventy percent. To avoid this, a precise inventory list with current values is essential. This should be reviewed and adjusted regularly, at least annually, especially after new purchases or price increases. Many insurers offer a waiver of underinsurance if the insurance sum has been accurately calculated, providing extra security. Also, clarify whether tax deductibility aspects are relevant for you.
To determine the insurance sum, you should consider the following items:
Commercial equipment (office furniture, computers, telephone systems). An office workstation quickly costs 2,000 euros.
Technical equipment (machinery, tools, production facilities). Specialised machines can have values of over 200,000 euros.
Goods and supplies (raw materials, semi-finished products, finished products). A well-stocked warehouse can contain goods valued at over 50,000 euros.
Third-party property that is rightfully in your custody (e.g., customer goods for repair).
If applicable, tenant improvements you have made at your own expense.
A careful valuation protects against unpleasant surprises in the event of a claim.
Cost factors and how you can influence contributions
The cost of contents insurance depends on various factors. Key considerations include the type of business and the associated risks; for instance, a jeweller faces a higher risk of burglary compared to a purely consulting office. The location of the business also plays a role, as risk assessment can vary by region (e.g., frequency of burglaries or natural hazards). The agreed insurance sum is another significant cost factor—the higher the value of the inventory, the higher the premium. On average, a small craft business with an insurance sum of 50,000 euros can expect annual costs between 150 and 400 euros. Choosing the level of excess also affects the premium: a higher excess usually results in a lower premium. Preventive measures such as certified alarm systems or fire protection devices can positively impact the premium and reduce the risk of a burglary. Comparing various offers is always recommended.
Expert tips for optimal insurance coverage
To ensure the best possible protection through your contents insurance, there are some important points to consider. Our expert tip: Carefully and regularly document your inventory, for example, by using photos and purchase receipts. This greatly facilitates the process in the event of a claim and can reduce processing time by up to thirty percent. Make sure to include all used business premises, including basements or storage areas, in the insurance contract, as otherwise, these areas will not be covered. Determine whether items in the open or in vehicles are also included in the insurance or if additional coverage is necessary. Immediately inform your insurer of significant changes, such as a move, an expansion of the business area, or the acquisition of new, high-value machinery. In cases of gross negligence, the insurer can reduce benefits; therefore, ensure appropriate safety precautions are in place.
Consider the following advice for comprehensive protection:
Check the conditions for the night clause for cash and valuables; often, storage in a certified safe with a minimum weight of 200 kilograms is required.
Understand the difference between replacement value and actual cash value compensation. Most policies reimburse at replacement value, but for older, heavily worn items, the actual cash value may be used (under forty percent of the replacement value).
Be aware of exclusions in the contract, such as damages caused by war events or nuclear energy.
Report a claim immediately, often within three days, to your insurer.
Conduct regular maintenance of your technical equipment to prevent damage.
A thorough understanding of your policy and proactive actions are crucial.
Current judgments and legal aspects of contents insurance
Jurisprudence in the field of contents insurance is constantly evolving. Courts frequently have to decide on the interpretation of insurance terms or questions of gross negligence. For example, the OLG Hamm ruled that the snatching of a necklace without overcoming conscious resistance does not necessarily constitute robbery under the terms. Another judgment dealt with the insurer's duty to advise regarding a safe clause when there are indications of particularly high values. It is important to know that insurers may reduce their benefits by up to one hundred percent for damages caused by gross negligence, such as a tap left running. The precise definition of insured risks, such as when a storm is officially considered as such (often from gale force eight), is also frequently subject to legal disputes. Therefore, a clear and understandable contract design is advantageous for both parties. In the case of uncertainties or disputes, legal advice can be beneficial. Find out about the differences between glass insurance as part of contents or building insurance, if relevant.
Your next step towards tailored protection
More useful links
IHK München offers comprehensive information on commercial insurance.
The Federal Ministry for Economic Affairs and Energy (BMWi) provides important guidance on risk management for start-ups on its platform Existenzgründer.de.
FAQ
For which companies is content insurance particularly important?
Contents insurance is beneficial for almost any company that has office equipment, a warehouse, or expensive technical devices. It is particularly important for businesses with high-value inventory, such as production companies, retailers, or craft businesses.
What happens in the event of underinsurance?
In the case of underinsurance, the agreed insurance sum is lower than the actual value of the inventory. In the event of a claim, the insurer proportionally reduces the compensation according to the ratio of the insurance sum to the actual value.
Does the contents insurance also cover damage caused by gross negligence?
Many modern policies also cover gross negligence, although often with a reduction in benefits. It is important to check the exact terms of the contract, as some insurers completely exclude gross negligence or severely limit the benefits.
What is the difference between new value and current value in contents insurance?
The replacement cost is the amount required to acquire new, similar items. The current value takes into account the age and wear of the damaged item and is the replacement cost minus a depreciation amount. Most contents insurance policies pay out based on the replacement cost.
Can rented or leased items also be covered by contents insurance?
Yes, generally rented or leased items located in the insured business premises and used by the policyholder can be included in the contents insurance coverage. This should be specified in the contract.
How quickly must a content insurance claim be reported?
A claim should be reported to the insurer without delay, usually within a few days (often three days). Specific deadlines can be found in the insurance terms and conditions. Prompt reporting is important for seamless claims processing.
