What insurance should tenants have?

Bedroom with bookshelf

If you are renting, then it’s important that you have contents insurance to minimise the risk of personal liability for damage to the property and to ensure your personal belongings are covered in the event that they are stolen, lost or damaged.

If you are renting, then it’s important that you have contents insurance to minimise the risk of personal liability for damage to the property and to ensure your personal belongings are covered in the event that they are stolen, lost or damaged.

Even if you don’t regard your belongings as having a high value, and think that you therefore don’t need to have a contents insurance policy, it is imperative to have one in order to provide liability cover for damage to third party property.

As anyone who has rented a property will know, there are many unforseen situations that can arise over time. It’s important to note that intentional acts that cause loss by a tenant, a tenant’s guest, or anyone who occupies the home, except where the loss is caused as a result of a fire or explosion, are not covered by a contents insurance policy. In addition, there is no cover for loss related to a fire or explosion due to an intentional act by a tenant.

Liability for damage

As a renter, you need to be aware of the new legislation relating to liability for damage by a tenant that was introduced on 27 August 2019 and that will impact how any damage is dealt with.

Under The Residential Tenancies Amendment Act 2019, tenants can only be held liable for the landlord’s deductibles or 4 weeks rent for accidental damage to the rental property.

The benefits of having contents insurance is that it not only provides cover for your personal effects but also includes personal liability cover for damage to third party property.

Your insurance broker can help you work through the details and advise you on an appropriate contents policy for your personal circumstances. They have industry relationships with multiple insurance companies and in-depth knowledge so it pays to consult with your local broker to find the right cover.

Covering your personal effects

In addition to the above liability considerations, it’s also always recommended you take out your own contents insurance policy to ensure you are covered if your belongings get stolen or are destroyed by floods or fire, for example. Many tenants incorrectly assume their landlord’s property insurance will cover their personal contents; however, this is not the case.

If you are renting a property that is fully furnished by the landlord, then the landlord should have their own policy to cover the furnishings i.e. curtains, beds etc. but your personal belongings will not be included in the cover. If the landlord claims on their own insurance, that insurer may seek compensation for damages if they are caused by the tenant.

It’s important to check with your landlord that they do in fact have insurance for their fittings and fixtures where applicable; for your own peace of mind and to avoid any dispute should items get damaged either through natural wear and tear or carelessness on your behalf.

It can be surprising how contents items can add up so it’s important that you include all clothing, jewellery, furniture, sports equipment etc.

A great broker will be able to help clarify the types of personal items that will be covered by your contents insurance policy. They have in-depth knowledge of what different contents insurance policies cover and can advise you on what you need to include and why having the associated personal liability insurance that attaches to the personal contents insurance policy is so important.

To discuss your insurance requirements in more detail if you are renting a property, contact your local NZbrokers Member today.