I’m a tenant, do I need home and contents insurance?

Yes and no. It’s a very good idea for tenants to have contents insurance. Our property managers have had two instances recently where a rental property has been completely destroyed by fire and the tenant has been left homeless and without any of their belongings.

Contents insurance will ensure you are covered to replace your possessions.

However, tenants do not need to get home insurance, that is the responsibility of the property owner.

What is the difference between home insurance and contents insurance?

Home insurance covers the cost of repairing or replacing the building and fixtures of a dwelling and other structures on the property such as fences, sheds and in-ground pools for loss or damage due to fire, storm or accidents, such as a car crashing through your lounge room wall.

Contents insurance covers household items and personal belongings for damage, theft or loss while they’re located in the home you are living in. This includes things like furniture, electrical appliances, clothing, TVs, computers and jewellery. A fire, for example, can damage both the building and its contents.

While the property owner is responsible for insuring the building, it is up to you to insure your contents.

You may not think your belongings are worth a lot, but if you consider the cost of replacing everything, including clothes, crockery, cutlery, kitchen appliances, lounge and dining suites, beds, sheets, towels, TVs etc. it can add up quite quickly. Do you have enough savings to be able to replace everything if the house suddenly burned down or you were the victim of a robbery? If not, you may want to get contents insurance.

What sort of contents insurance do I need?

You can get a variety of levels of cover. A basic renter’s policy with cover things like fire, flood or theft. It is usually cheaper but also has a maximum claim limit, such as $25,000.

More comprehensive policies give you greater coverage. You may also want to take the extra step and consider coverage for accidental damage such as red wine spills on your lounge suite.

Generally, your belongings are insured for what it would cost to replace them, not what it cost you to buy them, but this will vary depending on the policy.

How much should I insure my possessions for?

The first step in deciding on how much cover you need is working out what your belongings are worth. This will also help you decide what items are worth insuring.

It is very easy to underestimate how much your possessions are worth, so rather than guessing, start by listing your belongings and what it would cost to replace them at today’s prices. You also can use a contents insurance calculator to determine the value of your contents and give you an idea of the amount of cover you may need.

There are many insurance providers and policies can vary. When choosing contents insurance make sure you read the Product Disclosure Statement carefully. Check for exclusions, for example you may not be covered for theft if you left windows or doors unlocked. Also note specific wording, such as the difference between fire damage and heat damage from a fire.

Also check what items are covered. Portable items like handbags, glasses, laptops or mobile phones may not be included and will need portable contents insurance. Valuable items like jewellery may need to be insured separately or clearly listed on the policy. It is a good idea to keep receipts for more expensive items as proof of purchase. You can also take photos or list serial numbers. This will make it easier if you need to make a claim.

You should review your contents insurance every year and add or remove items and increase the coverage if necessary.

What if I share a house?

If you’re renting with other people, your policy will only cover your belongings. Your housemates will need their own insurance.

Author: REIWA

Source: reiwa.com