Living in a rental property? Get cover for the things that matter most
Renter insurance, also known as tenant’s insurance, covers you for your belongings. Normally, most of the contents of your home are covered, including furniture, appliances, clothing and electronics. The building that you live in will be covered by your landlord.
At the most basic and low-cost end of the spectrum, you can insure your belongings for fire or theft. Depending on how much you’re willing to pay in premiums, you can obtain more comprehensive cover for your valuables.
Read on to learn more about the types of renter’s insurance, what it covers, how much it costs, and how it can help you.
Find a renter's insurance policy to protect your belongings
What types of renter's insurance are there?
Renter’s insurance can be divided into two main types:
- Fire and theft. Widely available low-cost insurance that covers your belongings from fire and theft, the two most common types of damage for renters. This is a straightforward and affordable option, but will not cover anything other than fire and theft, and tends to have lower maximums.
- Comprehensive cover. Expanded options for covering contents from a wider variety of hazards, and options for liability insurance. This lets you protect your belongings from risks other than fire and theft, while liability cover can pay portions of the legal and medical fees incurred if other parties are injured at the residence.
Why do I need renter’s insurance?
Whilst you may not own your home, your possessions still hold value. It’s important to protect them.
- You are not covered by your landlord’s insurance. Many renters assume that a landlord’s insurance will cover their contents as well, which unfortunately is not the case.
- Your assets add up to more than you might think. If your home is gutted by fire and you have to replace everything you own, you might have to fork out $20,000 to replace your possessions.
- You can still obtain insurance if you live in a share house. The process of purchasing a policy for the contents of shared accommodation does take a little extra effort, but it might prove incredibly valuable if you’re a student who depends on an expensive computer and specialised equipment.
- You might benefit from liability cover. If you operate a business from home, and someone is injured as a result, you may be liable for hefty medical and legal fees.
How much does renter’s insurance cost?
The cost of your insurance premium will be calculated on the basis of several factors.
- The location of your home. Your premium will normally be higher if you live in a bushfire-prone area or a neighbourhood with a high crime rate.
- How secure your home is. Deadbolts, window locks, cameras, and alarm s will usually make your insurance cheaper, as will deterrents such as cameras or an alarm system.
- Your level of cover. As the number of optional extras you’re insured for increases, so will your premiums. Insurance that guarantees that the items you have lost will be replaced with new ones is a more expensive option than receiving their replacement value, which depreciates over time.
What does my policy actually cover?
As with other types of insurance, the inclusions and options vary greatly from one policy to another, and also depend on which provider you choose. Many of the points listed below are included as standard with some policies but will cost you extra if you buy cheaper, more basic insurance.
Think carefully about what would you’re most worried about replacing in the event of damage or theft, and check which policy offers the best value for those items. For example, if you don’t have much expensive jewellery, but your chest freezer contains a month’s worth of food, making sure you’re covered for food spoilage might be a good plan.
By the same token, a hailstorm is more likely to damage the actual building rather than the furniture inside it, so it’s less important for a renter to get hail cover than it is for a homeowner or landlord.
Read the product disclosure statement (PDS) carefully to know exactly what you’re covered for.
|Cover||What it does|
|Theft||Covers objects lost to theft, and potential damage to other belongings during the robbery.|
|Fire||Only covers fire damage to belongings. Does not cover cigarette burns, scorch marks, etc.|
|Storm||Covers damage to possessions caused by wind, hail and other storm effects.|
|Impact||Covers possessions from direct impacts such as meteors, falling airplane parts or objects thrown from cars.|
|Malicious damage||Covers vandalism and deliberate property damage caused by someone who does not live at the address.|
|Escape of liquid||Covers possessions damaged by most types of leaks.|
|Smoke||Covers smoke damage to possessions (items damaged by smoke but not burnt in a house fire).|
|Flood||Covers belongings damaged or destroyed by an area flooding. Does not cover leaks.|
|Accidental damage||Covers accidental damage caused by you to the landlord’s building and/or your contents.|
|Possessions outside the home||Has options to cover possessions stored outside (eg, garden furniture), contents in transit (eg, while moving house) or items typically carried around.|
|Electric motors||Covers electric motor burnouts of appliances in some circumstances. Generally excludes certain types of power surges such as those caused by lightning strike.|
|Temporary accommodation||Covers the cost of temporary accommodation if you’re unable to live at the property.|
|Liability||Covers legal and medical fees incurred by a visitor injuring themselves at your address.|
What should I look for in a policy?
You should consider three things when deciding what cover you need:
- A policy that covers your risks. Choose a renter’s insurance policy that will give you protection for your belongings. You won’t need to get cover for the building itself - your landlord will handle that. You’ll generally find that you won’t need to be covered for events like earthquakes and impact. However, if you live in a flood prone area, ensure you take out flood cover. Your shiny new laptop won’t be much use if it gets wet.
- A policy that provides great value. The golden medium is to find a balance between reasonable premiums and adequate cover. Make a list of the things you’re most worried about replacing, such as expensive jewellery or a laptop you take everywhere. Look for a policy that provides a generous limit for these items, but while offering discounted premiums based on your home’s security features, for example.
- A policy with the right extras. You’re spoilt for choice when it comes to optional extras for renter’s insurance. Liability, food spoilage and cover for bicycles and other sporting goods are popular add-ons, but will usually mean you pay a slightly higher premium.
What can I be covered for?
Depending on which insurer you choose, and the level of cover you purchase, you have a wide variety of options to choose from.
- Credit card theft. You can be covered up to $5,000 for stolen credit cards. Some policies will also give you cover for identity theft.
- Electric motor fusion. Get cover for motor burnout. If one of your big appliances dies, you can be covered for replacement or service costs.
- Glass breakage. If glass that is part of your furniture (such as a china cabinet) is accidentally broken, you can claim the cost of repair.
- Liability insurance. You can be covered for legal and medical costs if anyone is accidentally injured in your home.
- Lock replacement. If you lose your keys or your home is broken into, you can claim for the cost of having your locks and/or cylinders replaced.
- Outdoor items. Garden furniture and other belongings kept outside at your address can be covered.
- Perishable food. You can be covered for food that spoils as a result of a blackout or due to your fridge/freezer breaking down.
- Portable belongings. Items you take with you when you leave your home (such as a smartphone or luggage) can be covered.
- Removal of property. The cost of removing items that are damaged during a fire or break-in can be covered.
- Safety net cover. You can opt for a percentage in addition to the general contents sum insured, to cover any shortfall in replacement cost.
- Temporary accommodation. If a house fire or other insured event prevents you from being able to live in your home, you can be reimbursed for the cost of somewhere to stay.
- Transit cover. Your belongings can be covered during the process of moving to a new address.
- Vet costs. If your dog or cat is injured in an accident, you can claim for part of the treatment.
- Visitors’ property. The belongings of people such as guests and domestic helpers, who do not live permanently at your address, can also be covered.
3 traps to avoid
There are several renter insurance pitfalls to avoid:
Trap 1: Incomplete cover.
While basic fire and theft insurance can be cost-effective, it doesn’t offer complete cover from common risks. Floods, for example, are relatively common in some places and can cause even more damage to possessions than buildings. This makes it a popular inclusion in rental insurance. If you’re looking for more comprehensive renter’s insurance, additions like temporary accommodation, loss of income, portable contents and liability cover are available with some policies. Always check the limits, as these are usually relatively low for renter’s insurance and may not be enough for your needs.
Trap 2: Overpaying.
If you have comprehensive renter’s insurance, but only need fire and theft, you can get better value from a basic fire and theft policy. Your premiums will usually increase over time, so it’s always a good idea to compare tenant’s insurance policies regularly. If you think your premiums are too high, shop around and find out how much similar options from elsewhere might cost.
Trap 3: Not updating your policy.
Keeping your insurance company out of the loop when your circumstances change might mean you’re not covered for some losses. When purchasing cover, be aware of what is required from you when you move house. You can also look at updating your cover before you move house, for things like cover of belongings in transit.
How does renter’s insurance work?
The first step is to obtain a suitable tenant’s insurance policy, and to do that you need to work out what items you need insured. Use a contents calculator to estimate the total sum insured you will need, and obtain independent valuations for expensive items such as jewellery or antiques. Think about whether you are likely to need liability cover and what optional extras you would benefit from.
Once you have purchased your policy, make a detailed inventory of all your assets. Keep a record of serial numbers, scan your receipts, take photos, and file any valuations you might have.
When you need to make a claim, you will need to contact your insurer with details of your policy, as well as a list of what has been damaged, destroyed or stolen. The inventory you compiled will be a crucial way of verifying your losses. If you’ve been the victim of vandalism or burglary, you will need to provide the number of the police report.
Is renter’s insurance worth it?
In 2014, it was reported that 75% of Australian tenants do not insure the contents of their home. The same study revealed that burglaries are twice as common in rented properties as in homes which are owned by the occupants.*
Considering the expense of potentially replacing everything you own after a house fire, and the fact you can purchase a basic policy for less than $10 per week, renter’s insurance is definitely worth looking into.
What are the key differences between renter’s and landlord’s insurance?
Both policies cover you for core events, such as fire, theft, and water damage.
But renters insurance also has cover that is tailored specifically to the renting lifestyle. These benefits can include insuring your belongings in transit while you are moving from one address to another.
Renter’s insurance also give you cover for liability, as well as insurance for items such as electronics damaged by leaking water.
|Renter’s insurance||Landlord’s insurance|
|Covers the contents in a building||Covers the building structure itself|
|Cover for temporary accommodation if an insured event makes your residence impossible to live in||Cover for loss of rental income|
|Cover for extra living expenses while your home is being repaired, such as an electricity reconnection fee||Covers you for additional costs related to rebuilding or repairing a home after an insured event, including debris removal or architect fees|
|Cover for accidental damage to ceramic fixtures such as basins or baths||Cover for deliberate or malicious damage caused by tenants|
|Cover for portable items that are often taken outside the home, such as jewellery or electronics||Cover for the cost of repairs to the home or fixtures that are permanently attached to it (such as carpets or light fittings)|
Does tenant's insurance cover me for damage caused by my pets?
In the event that your landlord allows you to keep pets, it’s worth remembering that renter’s insurance doesn’t normally cover you for damage caused by animals kept at your property. Depending on the insurer and the level of cover you choose, you may still be insured for specific animal-related situations.
- Damage caused by wild animals. You can be insured for damage to your belongings that is caused by an animal that makes its way into your home uninvited. This usually excludes insects, rodents and vermin.
- Accidental breakage. It is possible to find a policy that covers you for accidents such as your pet knocking over an expensive vase or other fragile object, but the most common types of damage caused by pets are still usually excluded. For example, you’re not covered for your furry friends clawing or chewing on furniture, or going to the toilet where they shouldn’t.
- Liability for animal attack. If your renter’s insurance includes liability cover, conditions do apply, but generally you are insured for medical costs arising from someone at your home being injured by your pet. Injuries caused by dog breeds that are listed as dangerous or restricted are not covered.
|Pet damage that can be covered||Pet damage not covered||Get quote|
|Budget Direct||Insured events caused by resident pet, except accidental damage and most impact damage.|
Impact damage caused by resident pet to glass, crystal and ceramic items, except certain items like laptop or phone screens.
|Accidental damage caused by animal pecking, chewing, clawing, biting, urination or defecation.||Get quote|
Some other questions you may have about insurance for rental homes
Q. Is renter’s insurance tax deductible?
A. Generally not, although it may be if you work from home, or if part of the rental property is exclusively dedicated to business.
Q. Does renter’s insurance cover roommates?
A. Renter’s insurance covers everyone listed on the policy at that address but can also lead to difficulties. Your roommate is only covered if the policy clearly states so.
Q. Does theft insurance provide cover if my roommate steals something?
A. Generally not. Contents insurance of all kinds, including theft and vandalism, usually only applies to belongings stolen by someone who does not live at your address or was not invited into the home.
Q. Do students need renter’s insurance?
A. It depends on what you have at your living address and your ability to cover premiums. Universities explicitly take no responsibility for possessions kept in student accommodation, so the onus is on you. There are usually a lot of cost-effective options for students, and it is better to be safe than sorry, particularly if you’re dependent on things like a laptop that you can’t afford to replace.
Q. Should I get renter’s insurance extras or just the basics?
A. You need to weigh up the costs and the benefits. It can help to have an idea of the maximum you can pay for insurance, and the specific things that you must have covered. From there, compare all options that fulfill both needs and find the best among them.
Q. Should I also get liability insurance or just contents cover?
A. If you feel it is necessary then you should get it. You know best whether or not it is likely to be useful. However, if you work from home or otherwise operate a business from your rental property then it can prove extremely useful.