Guide to renters insurance
How contents insurance can cover your belongings in your rental home
Kochie’s top tips for renters purchasing insurance
Don’t miss what David Koch has to say about renters insurance.
David Koch
Economic Director
Video Transcript
Just because you’re renting doesn’t mean it isn’t important to protect your belongings! Because as much as we try to minimise the risk of theft and damage, sometimes life has other plans. Renters insurance – also known as contents-only insurance – is a financial safety net that can help repair, replace or pay out the value of your lost belongings. If you’re shopping around for a policy, Compare the Market has these tips. First check for inclusions.
Things like accidental damage to your property or portable contents like your phone may be offered as an optional extra but not included automatically. Don’t underestimate the value of your belongings. Take the time to look through your contents and make a reasonable assessment of the value of your belongings to ensure you have sufficient cover. Keep a record of your valuables. These might include photos, videos or receipts.
Having some evidence on hand can be super helpful if you ever need to make a claim. And always compare your options! It’s the best way to make sure you’re getting value for money while looking for a policy that meets your needs. So, protect your belongings and start your journey today, with Compare the Market.
Why take out renters insurance?
While your landlord’s insurance covers your rental home, your belongings aren’t included. By taking out contents insurance, you can:
- Cover the repair or replacement value of your possessions (up to the limits of your policy) if they’re damaged, lost or destroyed.
- Extend your policy to include more benefits, like portable contents cover for items that you take out of the home with you (e.g. bicycles, handbags or mobile phones).
- Be covered for your legal liability for death or injury of someone visiting your home or damage their own belongings.
Choosing cover as a renter
When it comes to choosing the right content insurance policy as a renter, you’ll need to consider:
- Your sum insured. This is the value of your insured belongings if you had to replace them with new items after an insured event. When setting your sum insured, be careful not to select too low a figure, as you could end up underinsured and may have to foot some replacement costs yourself.
- Optional extras. You may have the choice of optional extras to add to your renter’s insurance for extended coverage (and an additional premium). Some optional extras you may add to your policy include portable contents cover (also known as ‘personal effects cover’), specified contents cover and accidental damage cover.
- Policy excess. The excess is the amount you typically pay towards a contents insurance claim, and you may be able to choose this amount when you take out a policy.
Expert insurance tips for renters
Compare the Market’s home and contents insurance expert, Adrian Taylor, has the following tips for renters looking to insure their belongings:
Adrian Taylor
Executive General Manager – General Insurance
Make a reasonable assessment
It’s easy to underestimate the value of all the contents in your home, so take the time to look through and make a reasonable assessment of what your policy limit should be. If you can, take photos or videos of your possessions as evidence and keep them in a safe place.
You can switch anytime
You don’t have to wait for your policy’s renewal date to save on your insurance. You can cancel your existing policy at any time and switch insurers.
Don't rule out smaller brands
Don’t pass on the lesser-known or smaller insurance brands. These insurers are often backed by well-known underwriters, so you have peace of mind knowing you’re in safe hands. Plus, their policies could be cheaper than the major insurers!
How contents insurance for renters works
What does renters insurance cover?
Some events that are commonly covered by renters insurance can include:
- Fires
- Theft
- Storm damage
- Floods (sometimes offered as an optional extra)
- Damage from fallen trees
- Impacts and explosions
- Earthquakes and tsunamis
- Malicious damage and vandalism
- Debris removal and temporary accommodation
- Legal liability cover.
You should also keep in mind that contents cover can vary between insurers. Always read the relevant Product Disclosure Statement (PDS) for the full details of an insurance policy before you purchase it. It’s also worth checking your insurer’s Target Market Determination (TMD) to see if the policy is suitable for you.
What items are covered by renters insurance?
A renters insurance policy can cover a variety of belongings that you bring into your rental home, including:
- Clothing and jewellery
- Furniture
- Internal curtains or blinds, carpets, floor or wall coverings (that belong to you)
- Electronics (e.g. laptops, televisions) and toys
- Household electrical appliances and whitegoods
- Artwork, décor and valuable collections
- Tools of trade (e.g. musical instruments, power tools)
- Above-ground, inflatable and portable swimming pool and spas
- Garden equipment, mowing appliances and household tools
- Potted plants.
Keep in mind that different insurers may cover different items, so be sure to read your PDS carefully to know exactly what’s covered by your policy. You should also look at the limits and sub-limits of your cover (i.e. the maximum amount your insurer may pay you).
What isn't covered by renters insurance?
Insurance can’t cover everything, so make sure you check the exclusions of your renters’ contents insurance policy. These can vary between insurers, but some common exclusions are:
- Gradual wear and tear
- Damage caused by vermin and pests
- Business activity conducted from home
- Illegal acts
- Damage to electrical motors (unless covered by a motor burnout add-on).
Your contents insurance claim can also be denied if you failed to disclose important information when you signed up for the policy, like your true address or your previous claims history. This is why it’s important not only to be upfront and honest when taking out insurance, but to also update your policy when your circumstances and details change.
How much is contents insurance for renters?
When you take out a contents-only policy, the cost of your insurance may be affected by a range of factors, such as:
- The value of your belongings. Your policy’s sum insured (i.e. how much you’ve insured your belongings for) will be a factor in how much you pay for insurance. When you set your sum insured, you should ensure that it’s as accurate as possible to reflect the potential replacement costs of your possessions.
- Whether your suburb is a risk zone. Many Australian homes are vulnerable to various natural disasters such as floods, bushfires, cyclones, storm surges and erosions (including sinkholes). If you’re renting in a hazard-prone area, this risk will reflect in your insurance cost.
- Your suburb’s crime rate. While the area you’re renting might seem safe and quiet, the statistics might offer a different story. The higher the crime rate, the more your insurance policy will likely cost.
It’s important to remember not every policy provides the same level of cover, and not everyone’s belongings are worth the same amount. It always pays to confirm the full list of inclusions and exclusions within your insurance policy’s PDS to make sure the policy is a good fit for your situation.
Why is contents insurance important for renters?
Contents insurance can bring you financial peace of mind as belongings under the roof of your rental can be safeguarded against loss or damage caused by accidents or any other insured event.
There are additional benefits as well. Some insurers will also pay for temporarily storing undamaged contents if it isn’t safe to keep them at the rental property after it’s been damaged by events like fire or a flood.
What renters are responsible for
Do renters need home building insurance?
No, renters don’t need to take out home building insurance for their rental home as this is the responsibility of the homeowner – in this case, the landlord. As a renter, you only need to take care of your belongings inside the rental home, which contents insurance can help you with.
Are tenants liable for accidental damage?
As a tenant, you are responsible for:
- Any damage or breakages you, household members or visitors may cause
- The cost to replace and/or repair will fall to you (this doesn’t include wear and tear to a property).
If you’re renting, you might want to consider accidental damage as an optional cover on your contents policy. It’s typically available for an additional premium, although some insurers may offer this as a standard benefit in their contents cover.
What is a tenant responsible for?
If you’re renting a home, you’re responsible for damage you cause to the property, such as:
- Scratches on the wall
- Broken windows
- Chipped basins.
On a broader level, you’re also responsible for insuring the belongings you bring into the home, as your landlord’s home insurance won’t cover these.
Meet our home and contents expert, Adrian Taylor
As a General Insurance expert with over 13 years’ experience in financial services, Adrian Taylor works to make it easier for homeowners, renters and landlords to protect their home and contents. He believes it’s important for all residents (whether they rent, own or lease) to have adequate financial cover for their property and belongings in case the worse should happen.