What is tenants’ insurance and why do you need it?
While a landlord’s insurance will cover some things pertaining to the property, it won’t cover anything that a tenant has brought into the property.
When you’re living in a rental property, it’s easy to assume that your landlord’s insurance will cover any damage. However, while a landlord’s insurance will cover some things pertaining to the property, it won’t cover anything that a tenant has brought into the property.
Most likely, the landlord’s insurance will cover the fittings and fixtures that were already in the property before a tenant moved in. Things like any white goods a tenant has brought into the property, furniture that belongs to the tenant or any personal items and valuables the tenant keeps in their rental property need to be covered by tenants’ insurance.
Marshall White property manager Jade Wilson is adamant about the importance of tenants’ insurance. ‘I always remind tenants at the time of property acceptance or key handover that they need to take out a contents insurance policy,’ she says. ‘You wouldn’t drive around in an uninsured car, so why would you live in a rental property without insurance?’
Tenants’ insurance can cover a variety of different issues or instances of damage depending on your level of coverage. Rob Sinclair, an insurance broker from Greater National Group, recommends you consider exactly what kind of insurance your particular set up might require.
‘There’s lots of different contents insurance policies on the market and they all cover different things,’ Rob explains. For example, some insurance policies will only cover your belongings up until a certain dollar amount, others will only cover policies in certain events such as a fire or flood damage.
It’s important to carefully consider exactly what you want covered and for how much. ‘It’s not much good having an insurance policy that will only pay out $1,000 per item if you have a $20,000 engagement ring,’ Rob says.
Some insurance policies will only cover your belongings up until a certain dollar amount, others will only cover policies in certain events such as a fire or flood damage.
Tenants should also keep in mind the specific nature of their rental arrangement when getting insurance. Are you keeping items in a storage cage or shed? Is your rental an apartment or a house? For tenants’ insurance to be effective, tenants need to take these things into account and make sure their coverage is tailored for their specific needs.
‘Tenants are often unaware that some contents insurance policies don’t cover items kept in storage cages, so tenants either need to be sure that their storage cage is covered or refrain from keeping valuables in there,’ Jade advises.
If you’re unsure about where to start, or how to get insurance that’s right for you, Rob strongly recommends speaking to an insurance broker to make sure you consider the widest possible range of options. ‘It can be daunting attempting to deal with insurance companies directly, so people are better off going through a broker who is professionally equipped to speak to insurance companies and make sure you get the best coverage available.’
Jade believes that it’s important for property managers to educate tenants on the value of taking out insurance. ‘It can eliminate any issues during the tenancy if something happens to a tenant’s belongings because of property damage or theft.’
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