What is contents insurance and how does it best protect your business?
12.06.25
7
Minutes
Katrin Straub
Managing Director at nextsure
An unforeseen loss or damage to your business equipment can quickly become an existential threat. Find out how contents insurance protects your business from the financial consequences and helps you resume operations quickly.
The topic in brief and concise terms
Contents insurance protects a company’s movable business equipment, goods and stock against financial losses caused by fire, escape of water, storm, hail and burglary.
Correctly determining the sum insured at new replacement value is crucial to avoid underinsurance and the resulting financial disadvantages in the event of a claim.
Additional modules such as natural hazard, glass or business interruption insurance can customise and extend cover to meet the company’s individual needs.
Understanding the key aspects of contents insurance
Contents insurance is a commercial property insurance policy specifically designed to protect the movable assets of your business. These include, for example, office furniture, technical equipment, machinery, goods and stock. It covers damage caused by specified perils such as fire, escape of water, storm, hail or burglary. Many business owners underestimate the risk that a single claim can already result in costs of several tens of thousands of euros. The sum insured should correspond to the replacement value of all inventory to avoid underinsurance; experts often recommend setting the sum insured at least ten per cent above the calculated value. A distinction from private household contents insurance is important here, as contents insurance is tailored to commercial risks. A precise understanding of the insured perils and exclusions is crucial for comprehensive protection.
Scope of cover and insured perils in detail
A contents insurance policy typically covers damage caused by a range of standard perils. These include fire, for example caused by a blaze or an explosion, and damage caused by burst pipes. Storm and hail damage are also usually covered, although a minimum wind speed is often defined for storm damage. Another important component is cover for burglary, robbery and vandalism after a break-in. A common claim is the theft of laptops and other equipment, which can quickly result in costs of over five thousand euros. In the event of a claim, the insurer covers not only the cost of repairing or replacing the damaged or stolen items at replacement cost, but often also clearance and demolition costs, moving and protection costs, as well as the cost of restoring business records. It is important to check which additional modules make sense for your business.
The following costs can typically be covered:
Repair costs for damaged items up to, for example, EUR 2,500.
Replacement costs for destroyed or stolen items at replacement cost.
Clearance and demolition costs, which often amount to up to ten per cent of the sum insured.
Costs for temporary security measures after a break-in, such as replacing locks for around EUR 300.
Moving and protection costs, if other items have to be moved in order to rectify the damage.
Firefighting costs, which can quickly reach several thousand euros.
These benefits help to get the business operational again quickly after a loss.
Useful add-on modules to optimise your protection
The basic cover of a contents insurance policy is often not sufficient to cover all the specific risks faced by a business. Insurers therefore offer a range of optional add-ons. One important extension is cover for natural hazards, which covers damage caused by natural events such as flooding, backwater, earthquakes, ground subsidence, landslides, heavy snow or avalanches. For businesses in high-risk areas in particular, this module can sometimes be essential, as flood damage can quickly lead to costs of more than €50,000. Glass insurance can also be worthwhile to cover breakage damage to the business glazing, such as shop windows or glass doors. For companies with a lot of electronics, a separate electronics insurance policy is often recommended, which also covers user error or damage caused by power surges, extending the protection of a standard contents insurance policy. Business interruption insurance is another important component, compensating for lost profit and ongoing costs during a shutdown following an insured material loss.
Determine the correct sum insured and avoid underinsurance
Determining the correct sum insured is a crucial point in contents insurance. It should correspond to the new replacement value of all insured items, i.e. the amount that would have to be spent to replace new, identical items. A sum insured that is set too low leads to underinsurance. In the event of a claim, the insurer would then only pay proportionately, even if the loss is below the sum insured. For example, if the value of the contents is €100,000 but the sum insured is only €70,000 (i.e. seventy per cent), any loss will also only be reimbursed to the extent of seventy per cent. To avoid this, an accurate inventory list with up-to-date values is essential. It should be checked and adjusted regularly, at least once a year, especially after new purchases or price increases. Many insurers offer a waiver of underinsurance if the sum insured has been correctly determined, which provides additional security. Also clarify whether aspects of tax deductibility are relevant to you.
To determine the sum insured, you should take the following items into account:
Commercial furnishings and equipment (office furniture, computers, telephone systems). A workplace in an office can quickly cost €2,000.
Technical equipment and machinery (machines, tools, production systems). Special-purpose machines can have values of more than €200,000.
Goods and stock (raw materials, semi-finished products, finished goods). A well-stocked warehouse can contain goods worth more than €50,000.
Third-party property that is lawfully in your care (e.g. customer goods for repair).
Where applicable, tenant improvements that you have made at your own expense.
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 a range of factors. The type of business and the risks associated with it are key; a jeweller has a higher burglary risk than a pure consultancy office. The location of the business also plays a role, as the risk assessment can vary by region (e.g. the frequency of burglaries or natural hazards). The amount of the agreed sum insured is another key cost factor – the higher the value of the contents, the higher the premium. On average, a small craft business with a sum insured of 50,000 euros can expect annual costs of between 150 and 400 euros. The choice of excess also affects the premium: a higher excess generally leads to a lower premium. Preventive measures such as certified alarm systems or fire protection equipment can have a positive effect on the premium and reduce the risk of burglary. Comparing different offers is always advisable.
Expert tips for optimal insurance cover
To ensure the best possible protection through your contents insurance, there are a few important points to bear in mind. Our expert tip: Document your inventory carefully and regularly, for example with photos and purchase receipts. This makes claims handling much easier in the event of damage and can reduce processing time by up to thirty per cent. Make sure you list all business premises used, including basements or storage areas, in the insurance policy, as otherwise there is no cover for these areas. Clarify whether items kept outdoors or in vehicles are also insured, or whether additional cover is required for this. Inform your insurer promptly of any significant changes, such as a move, an expansion of the business premises or the purchase of new, high-value machinery. In the event of gross negligence, the insurer may reduce the benefit; therefore, ensure you have appropriate security measures in place.
Please note the following advice for comprehensive cover:
Check the night-time clause conditions for cash and valuables; often storage in a certified safe with a minimum weight of 200 kilograms is required.
Understand the difference between new-for-old replacement and indemnity based on current value. Most policies replace on a new-for-old basis, but for older, heavily worn items, current value may be applied (less than forty per cent of the replacement value).
Pay attention to exclusions in the policy, for example for damage caused by war or nuclear energy.
Report any claim to your insurer immediately, often within three days.
Carry out regular maintenance of your technical systems to prevent damage.
A precise understanding of your policy and proactive action are crucial.
Case law in the area of contents insurance is continually evolving. Courts often have to decide on the interpretation of insurance terms and conditions or the question of gross negligence. For example, the Higher Regional Court of Hamm decided that tearing off a necklace without overcoming conscious resistance does not necessarily count as robbery within the meaning of the policy conditions. Another ruling concerned the insurer’s duty to advise regarding a safe clause where there are indications of particularly high values. It is important to know that insurers may reduce benefits by up to one hundred per cent in the event of damage caused by gross negligence, such as a tap left running and not turned off. The precise definition of insured perils, for example when a storm is deemed to qualify as such (often from wind force eight), is also frequently the subject of legal disputes. Clear and comprehensible contract drafting is therefore beneficial for both sides. If anything is unclear or in the event of disputes, legal advice may be worthwhile. Also find out about the differences between glass insurance in contents insurance or residential buildings insurance, if relevant.
Your next step towards tailored protection
Contents insurance is a fundamental component of cover for any commercial business. It protects you against the financial consequences of damage to your business equipment and stock, which can quickly run into six-figure sums. A careful analysis of your individual needs, the correct determination of the sum insured and the selection of suitable additional modules are crucial for optimal protection. Even an annual review of your policy can ensure that your cover remains up to date and provides protection when it matters. At nextsure, we understand that every company is unique. That is why we offer you tailored advice to find the contents insurance solution that is right for you. This allows you to focus on your core business while your inventory is protected as well as possible. Also consider related topics such as fire protection in commercial premises.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific suggestions for optimisation.
More useful links
IHK München offers comprehensive information on business insurance.
The Federal Ministry for Economic Affairs and Energy (BMWi) provides important guidance on risk management for start-ups on its Existenzgründer.de platform.
FAQ
Which companies is contents insurance particularly important for?
A contents insurance policy is worthwhile for almost any business that has business fixtures and fittings, stock or expensive technical equipment. It is particularly important for businesses with a high level of physical assets, such as manufacturing companies, retailers or trades businesses.
What happens in the event of underinsurance?
In the event of underinsurance, the agreed sum insured is lower than the actual value of the contents. In the event of a claim, the insurer reduces the compensation proportionally in line with the ratio of the sum insured to the actual value.
Does contents insurance also cover damage caused by gross negligence?
Many modern policies also provide cover in cases of gross negligence, although often with a reduction in the benefit. It is important to check the exact terms and conditions in the policy, as some insurers exclude gross negligence entirely or severely limit the benefit.
What is the difference between replacement value and current value in contents insurance?
The replacement value is the amount required to replace new, identical items. The actual cash value takes into account the age and wear and tear of the damaged item and is the replacement value minus an amount for depreciation. Most contents insurance policies pay on a replacement value basis.
Can rented or leased items also be insured under contents insurance?
Yes, as a rule, rented or leased items that are located in the insured business premises and used by the policyholder can also be included in the cover of the contents insurance. This should be specified in the contract.
How quickly must a contents insurance claim be reported?
A claim should be reported to the insurer without delay, usually within a few days (often three days). Exact deadlines can be found in the insurance terms and conditions. Prompt reporting is important for smooth claims handling.
