If you’re renting, you may well be wondering what happens in the case of a disaster or break-in? While the landlord will take care of the building, what about all your possessions?
The answer is simple: contents insurance, which all renters should always have.
Your landlord is ultimately responsible for the building you live in, so renters don’t need to worry about the ‘home’ in home and contents insurance.
But your landlord’s insurance will not cover damage or loss of your personal possessions. For this, you need your own contents insurance; also sometimes called renters’ insurance.
Sophie Walsh, an insurance expert at finder.com.au, gives a common example.
“Many renters think their landlord would be responsible for covering damage to belongings if something were to happen. But if the roof is leaking and your couch is ruined, your landlord is not responsible.
“Renters need to take out their own contents insurance to cover replacing their worldly possessions from scratch if something were to go wrong,” she says.
Renters insurance will protect anything that’s not fixed to the walls of your home, like your clothes, furniture, jewellery, books and electronics.
This gives you the funds to replace them if they are destroyed or damaged in a fire or weather event like a flood or storm, or if they are stolen or damaged in a break-in.
Not all policies are the same though, so it’s good to check the inclusions and exclusions. For instance, some insurers will automatically replace your blender if the motor burns out, or cover the cost of broken glass in your TV cabinet, while others may charge a separate fee.
Walsh also recommends looking at “add-ons”, such as portable contents insurance, which covers items like your watch or phone that you often use outside of home, and potentially list your more expensive items, like bikes and golf clubs, separately to make sure you get the full replacement price.
Walsh advises renters to find a balance between the price of the policy and what you will get if you need to make a claim.
“There’s often a cap for how much you can claim on one item – for example, jewellery over $2,000 – so look for a policy that provides a generous limit, so you know your most expensive items are covered,” Walsh says.
Some insurers offer discounts for applying online or for taking out more than one type of insurance, like car and renters’ insurance.
“When comparing policies, see if there are any discounts that would tip the scales in favour of one insurer over another,” Walsh says.
“You don’t want to leave yourself underinsured, but at the same time, make sure you’re paying for the cover you need and not extra for things that don’t apply to your situation.”
The cost of renters’ insurance is based on a few factors: the value of your contents (there are plenty of online calculators to help you work that out); the excess you are prepared to pay if something needs to be replaced; and risk factors.
Insurers will take into account your age; if you’ve made a claim before; where you live – you’ll pay more if you are in a high-crime area or flood plain, for instance – and steps you’ve taken to protect your possessions, such as a burglar alarm.
It will pay to shop around, but you can expect to pay about $10 a week for basic cover for up to $50,000 cover.
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