Living in a rental property? Protect your possessions and get liability coverage
Renter insurance, also known as tenant’s insurance, is a lot like contents insurance but for people who are renting their home. It does not cover damage to the building itself, as this is covered by the landlord. Less expensive policies may only provide cover for basic hazards, but it is possible to find renter’s insurance that includes liability coverage and more comprehensive protection for possessions.
Find contents insurance to protect your possessions while renting
Types of renter’s insurance
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.
What does tenant’s insurance cover?
Renter’s insurance is comparable to home insurance in terms of what can be covered, and some policies include many of the same options. Because renter’s insurance only covers the contents of a home and not the building itself, there are different hazards to consider. For example, 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.
Basic renters fire and theft insurance
|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.|
More hazard cover
|Cover||What it does|
|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.|
|Cover||What it does|
|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 cover should I get?
You should consider three things when deciding what cover you need:
- Risk levels. Because renter’s insurance only needs to protect the contents of your home from damage it has a different risk profile to home insurance. Possessions are much less at risk of damage from storms, lightning, earthquakes and impacts than the building itself. However, there is still a possibility of these hazards causing damage, and you should decide whether or not you need protection from these.
- Cost. Renter’s insurance offers a variety of low-cost options, most notably for fire and theft coverage. This is a cost-effective way of ensuring protection from the two most common hazards, but does not cover anything else. More complete cover means higher premiums. Renter insurance also tends to have lower limits, which contributes to lower rates.
- Extras. Select extras based on your price and coverage needs. Liability, accidental damage and portable possessions cover are good options for expanding the cover available to you, but will incur higher premiums.
Things to avoid with renter’s insurance
There are several renter insurance pitfalls to avoid:
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.
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.
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.
Common questions about insurance for rental homes
Q. What does landlord’s insurance cover?
A. The landlord’s insurance policy is primarily for the building you are renting, and typically offers no cover for your possessions.
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. Do I really need renter’s insurance?
A. If you add up all of your possessions, including crockery, linen, clothing, appliances, electronics and everything else you own, it’s generally worth more than you think. If everything is lost, it will cost a lot to replace it. Fire is one of the few hazards that can completely destroy everything, and theft is a common and unpredictable risk so basic fire and theft insurance is strongly recommended at the least.
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.Back to topPicture: Shutterstock