Tenants ignorant of repercussions, leaving them vulnerable
Tenants who forego insuring the contents of their home may be risking up to $60,000 in personal possessions and further thousands in fixtures and fittings – simply because they don’t understand the potential repercussions of accidents or theft – says leading insurance comparison experts comparethemarket.com.au.
Abigail Koch, spokesperson at comparethemarket.com.au, says, “Tenants are likely the least motivated household group to take out contents insurance in a climate of ongoing rental pressures, petrol increases and higher energy costs. Home owners are motivated to have it because it’s simple to package into their home insurance and they feel an additional sense of responsibility. However, many tenants either aren’t aware of contents insurance or don’t think it’s necessary for them.
“Tenants tend to undervalue their contents. Typically, those that have moved straight out of the family home have an average of $15,000 worth of contents, but this can quickly increase to around $60,000 once they furnish their new property.”
Abigail says tenants are one of the most vulnerable household segments, and contents insurance provides basic protection and peace of mind should something go wrong. “It’s important that tenants realise their contents are not necessarily protected if they’re damaged due to the fault of someone else – including their landlord or other tenants. Landlord’s insurance typically does not protect tenant possessions and is not a legal requirement,” she says.
Understanding the confusion faced by tenants, Abigail dispels five common myths around personal contents and the level of responsibility that falls on the landlord.
- Myth: My landlord must pay for alternative accommodation if structural damage makes my home unliveable.
Even if your home is reduced to rubble and your landlord is at fault, he or she is not legally required to pay for alternative accommodation – although they should discontinue your rent for as long as your home is not fit for occupation. If you have contents insurance, your hotel could be paid for.
- Myth: My landlord must cover the cost of my possessions if they are responsible for the damage.
This isn’t always the case. If a pipe bursts and you have a scene from Titanic in your living room, the landlord or strata management will pay for a new pipe and the labour to repair it, but is not required to hand over a cent for your water-logged contents. Goodbye, gorgeous sofa!
- Myth: Landlord insurance will cover all accidents that damage my home.
Insurance companies define and list what they class as an ‘accident’ – whether a gas explosion or telegraph pole through the roof – but they do not include every possible incident. For example, your landlord’s insurance may cover your TV if it is ruined due to a building electrical surge, but if a lightning strike causes the same issue, you may have to fork out yourself to replace the TV.
- Myth: My landlord will pay for all damage to carpet, fixtures and fittings.
Even if your landlord has insurance, you may face paying for damage to these items if you were at fault. Contents insurance can cover loss or damage to items such as carpet, cupboards and wardrobes. Without it, a red wine spill could cost you your entire bond or more if the carpet throughout the entire property needs to be replaced.
- Myth: My name isn’t on the lease but I’m still covered if damage occurs.
Sub-lessees are even more vulnerable. Your landlord’s insurance won’t cover your contents and your housemate’s may not either. You may require an individual policy for your items only.