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Do you need contents insurance as a renter?

By George Hadgelias

Moving into a rental property can sometimes be a costly exercise.

You’ve got your moving costs, you may have had to buy some new furniture or appliances, and you’ve got to come up with bond.

And then you need to decide whether to purchase renter’s contents insurance to protect your belongings. But do you need that insurance?

The answer, of course, depends on your own personal circumstances. Here are some factors you might want to consider.

How valuable are your contents?

Clearly there are marked differences in most renters’ personal situations.

Some people rent large homes to live in with their families, and therefore bring a family-sized array of contents with them – potentially worth hundreds of thousands of dollars. There’s a high likelihood they’ll want to insure those assets.

First-time renters or share house tenants, on the other hand, may have very few personal possessions that need insuring.

For some renters with minimal contents, it might not be worth the cost of insuring them says Focus Insurance Brokers director David Federici.

“The chance of there being a fire or storm damage in an apartment-type complex, or theft, is pretty low, and if someone did break in, what are they going to steal anyway?” he says.

How much are you prepared to spend?

The costs of renters’ insurance depends on many factors, including the insurer, the house and the value of the personal property.

Federici says most insurance policies for renters will cost between $200 and $800 annually, to insure only their contents. For some renters that is a small price to pay for peace of mind, while others might not see the value, he says.

“Let’s say you nominated $5000 worth of contents. It might cost $200 to insure that. Most young people would probably choose to spend the $200 on a night out instead.”

How risky is the property?

Whether to insure your contents often comes down to your appetite for risk. Is your property valuable enough to insure, and how badly would it impact you if you were to lose that property?

Much of that risk is determined by the house itself.

An old inner city house with lots of windows at street level, plenty of old wiring, poor fire protection and located in a suburb with a high crime rate, might be considered a substantial risk for burglary or damage to your belongings.

But a newer apartment building with intercom security and only one entrance to your apartment may be quite unlikely to experience an incident or break-in.

These are all factors to consider.

Insurance only covers you at home

It’s worth noting that many renters make the mistake of believing that their policy insures their contents at all times.

But most policies will only cover your property while it’s actually in the house.

Drop your phone while getting off a tram, or drive off with your laptop sitting on the roof of your car, and you could be left high and dry, so be sure to check the product disclosure statement carefully and make sure you know exactly what’s covered and when.

Click here for more information.

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