Insurance when Renting - Are you Properly Covered?
Did you know that over half of Australian renters don’t have insurance for their valuables? That’s a staggering number of people putting themselves in a situation where they’re left out of pocket if something goes wrong.
Some renters may mistakenly believe their valuables are covered under their landlord’s insurance policy. Or perhaps some simply think, “It won’t happen to me.”
Yet one in 15 Australians will file a claim on their Home and Contents insurance each year – that’s nearly 720,000 claims.
What is Insurance for renters?
Renters insurance is a type of contents insurance that provides financial protection against damage and loss to the personal items in your home. It can also cover you for damage to your landlord’s house and fixtures that you may be responsible for.
Should the home you’re renting be affected by fire, theft or other unforeseen events, renters insurance will help ensure you don’t end up significantly out of pocket.
Ask yourself, ‘If disaster struck, would I be in a financial position to replace all my furniture, clothes, computers and electronics?’ We can’t control everything that happens, but we can take steps to reduce the financial impact of unexpected events.
That’s why it’s so important to have contents insurance to cover your valuable belongings against damage and loss due to:
- Fire
- Vandalism
- Theft and attempted theft
- Storm damage and lightning
- Water damage and floods
- Explosion and impact damage
- Earthquakes.
What level of cover do I need?
It’s up to you what level of cover you choose to take on for your contents insurance. A basic policy will generally cover events such as fire, flood or theft, and have a lower limit that you can claim up to.
If you choose a higher level of cover, you’ll be protected for a wider range of events and can also be insured against accidental loss or damage. Make sure you look for a policy which has new for old replacement for your contents too. Some policies will also provide cover if something happens to your items while you’re away from home.
Remember, it’s easy to underestimate how much your possessions are worth, so it’s a good idea to go room to room and estimate how much it would cost to replace each item. You’ll be surprised at how quickly the total adds up.
On area of insurance that could be overlooked when taking out contents insurance is public liability insurance. This covers you in the event that someone visits the property you are renting and somehow injures themselves which eventuates in them pursuing a personal injury or negligence claim against you personally. It is rare but it can happen, and it is something that we would recommend for our tenants to add to their contents policy so it can protect you financially if this situation were to occur.
Always read over the terms and conditions of your policy to make sure you understand the exclusions, limits and conditions that may affect your coverage. If you have any questions, you should ask your insurer as terms and conditions will differ between insurance companies.
What types of personal items are covered?
With furniture, appliances, clothing, computers, electronics and jewellery, the value of the contents in your home can quickly add up to thousands of dollars. Renters insurance is designed to cover you for the replacement value of these everyday items and more.
However, bear in mind that it’s your responsibility to keep your receipts and to determine the correct replacement value for your items. In some cases, this may involve having an appraiser create a valuation for the more expensive items.
Are there different types of Contents insurance?
While all contents insurance policies are designed to do one thing – protect the contents in your home – there is no one-size-fits all approach to your cover.
You can tailor your contents policy to meet your needs by adding optional extras for a higher premium.
For example, you may want to take out additional cover for:
- Accidental damage: Covers you for loss or damage to contents caused by an accident in the home.
- Flood insurance: Provides additional cover for the contents in your home due overflowing lakes, rivers, dams, etc.
- Personal effects cover: Insures your valuable items away from home. There are two types of personal effects cover. Unspecified which covers unspecified items worth up to $1000 and Specified which covers specified items listed on your insurance certificate worth $1000 or more.
- Collections cover: Allows you to insure expensive items, such jewellery and artwork, at their appraised value.
Why you don’t need Home insurance when you’re renting
Home insurance differs from contents insurance in that it’s designed to cover the cost repairing, rebuilding or replacing the building itself. That’s why, as a renter, you don’t need to carry home insurance.
On the other hand, if you’re a homeowner (or planning to become one) it’s important to carry home and contents insurance to cover both the building and the contents within it.
