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Renters insurance (also referred to as contents only insurance) offers a financial safety net against specific events, such as theft of, or unforeseen damages to, your belongings (e.g. furnishings, clothing, jewellery and home electronics).

This type of cover is specifically designed for people who are renting, which is a big chunk of Aussies. According to the Australian Bureau of Statistics (ABS), nearly one third (32%) of Australian households rented their home in 2017-18.1

Without cover, you’ll have to foot the costs associated with repairing or replacing your belongings should anything happen to them.

When you live at a rental property, you don’t need to organise home insurance (i.e. building insurance) – that’s the landlord’s business. However, everything inside the four walls that you own and the landlord doesn’t is the tenants’ responsibility.

Why is renters insurance important?

If your home is destroyed and you don’t have renters insurance, it might cost you more than a year’s salary to replace your possessions. This might sound excessive; however, the ABS reported the mean value of contents in Australian dwellings* at $69,400 in 2017-18.2

So, when was the last time you took stock of all your belongings?

It’s easy to underestimate the number of household belongings you have and therefore underinsure your contents. But, would you be prepared to pay for the damages caused by a fire, flood, storm or other emergencies?

In 2017, Emergency Management Victoria stated that one in two Victorians didn’t have insurance, or enough insurance, to cover the cost of replacing their home or household possessions in these events.3

When taking out a renters insurance policy, you need to make sure the sum you’re insured for is enough to replace all of your contents.

How does renters insurance work?

Renters insurance works by paying a premium to an insurer to protect your belongings in a range of scenarios that are outlined in your policy – and cover does differ per policy and provider.

If your belongings have been damaged, destroyed or stolen in a covered event, you will need to submit a claim to your insurer. If your claim is accepted, you will more than likely have to pay an excess to process it. Your claim may need to include receipts or photos of the damaged or stolen items to prove how much they’re worth and that you owned them.

Does renters insurance replace items or pay out money?

If you make a claim on your renters insurance for a damaged, destroyed or lost item, your insurer will generally replaces your item with the same item or a similar model.

However, if your insurer doesn’t replace your valuables with a suitable alternative, they might settle your claim by:

  • repairing the items through their repairers
  • paying you for the cost to replace or repair the items
  • providing a cash settlement
  • offering you a gift card.

It’s important to make sure your contents insurance includes a new-for-old replacement benefit; check your PDS to determine your contents will be replaced with new items.

A young couple asking property agent what is rental insurance when signing rental property agreement

What events does renters insurance cover against?

Standard renters insurance policies may cover your contents from:

  • fire damage
  • storm and rainwater damage
  • lightning damage
  • damage from explosions, earthquakes or impact
  • theft or attempted theft
  • malicious damage or vandalism
  • escape of liquid (e.g. damage from a burst water pipe; policies may not cover the replacement of the water pipe itself)
  • damage during transit (if moving house)
  • accidental breakage of glass, ceramic and sanitary fixtures.

Higher-level renters insurance policies will typically cover a broader range of events that standard policies don’t. This may include cover for contents left outside (i.e. bikes on the lawn) or food spoilage (i.e. if your fridge stops working and your food goes off).

With some renters insurance policies, you may also be able to add on optional extras (typically at an additional cost) for your contents, such as:

  • flood cover
  • motor burnout cover (when a fuse blows and damaged home equipment or items stop working)
  • personal effects cover (for items you regularly take outside the home).

Which belongings are covered by renters insurance?

Renters insurance policies cover your valuables if they’re stolen, damaged or destroyed by certain events. Renters insurance can cover a range of belongings, such as:

  • whitegoods (washer, dryer)
  • technology (laptops, tablets, cameras)
  • designer clothes
  • furniture
  • collectables
  • jewellery and more.

Although, some policies might limit how much you can claim for certain items (e.g. up to $2,500 for a hand-woven carpet or rug), or might apply exclusions for particularly expensive items.

You may be able to add cover for specified contents (e.g. a diamond wedding ring) up to a certain amount (i.e. $15,000), at an additional cost.

These items are typically only covered within the bounds of your property (e.g. if you lose your wedding ring around the home). However, if you add on personal effects insurance, you can cover these items if you take them outside the home (i.e. if you lose your ring while going for a run).

Such security doesn’t come for free, though, as adding this type of cover typically increases your monthly premiums.

two young renters searching on the internet to answer what is renters insurance

How does renters insurance work if I’m renting a room in a share house?

If you’re renting out a room in a share house and want renters insurance, you can’t specify cover for possessions in a specific room. However, you can potentially split the costs of a contents insurance policy with your roommates and get cover for the value of all your combined belongings.

If you are getting a renters insurance policy for a share house, you may have to watch out for some exclusions. For example, some insurers might limit how many roommates can be listed under one policy. So, if you’re living in a large share house, make sure your insurer will cover you all under the same policy.

Also, your valuables may not be covered if they’re stolen or damaged by your roommates. Check your Policy Disclosure Statement (PDS) for specific information regarding your cover.

How much does renters insurance cost?

Specific costs are hard to determine, as they will vary depending on your situation. When you apply for contents-only insurance, the cost of your renters insurance may be affected by a range of factors, such as:

  • the amount or sum you’re insured for
  • estimated value of your contents
  • history of claims, thefts or burglaries at the address
  • if your home is used for business purposes
  • your suburb’s crime rate and median rent price
  • your home security
  • age and structure of your home
  • risk of natural hazards (e.g. the likeliness of your home flooding)
  • whether you wish to cover items you take outside the home (personal effects insurance).

So, how do you choose a renters insurance policy?

Firstly, work out the value of your belongings with an online calculator to determine how much cover you need. Just make sure your policy adequately covers the replacement costs for all of your belongings.

Secondly, decide which events you’d like your renters insurance to cover. For example, if you live in a flood zone, make sure your renters insurance covers flood damage.

Once you’ve figured out what you’re looking for in a policy, you’ll only need a few minutes to use our contents insurance comparison service. By using our handy tool, you can see the features and prices of different renters insurance policies, without needing to search through multiple websites to find great-value cover.

Sources & Notes

1 Australian Bureau of Statistics – Housing Occupancy and Costs, 2017-18; Key Statistics.
2 Australian Bureau of Statistics – Household Income and Wealth, Australia, 2017-18 – Data Cube 2: Household Wealth and Wealth Distribution.
3 Emergency Management Victoria (16 June, 2017) – ‘Insure it- it’s worth it’ campaign launched.

* The Australian Bureau of Statistics classifies private dwellings as flats, houses, units, caravans, garages, tents and other structures that were used as places of residence at the time of interview.

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