Many of those renting properties – as opposed to buying them – may not have considered home insurance. Although tenants may not have to pay the same premiums as homeowners, they can still be responsible for damages, and held to account financially. In this piece, let’s answer the question, ‘What is tenant insurance?’ and the legal liabilities that all renters should be aware of.
- What is Tenant Insurance, and Why Do I Need It?
- What Does Tenant Insurance Cover?
- What is NOT Covered by Tenant Insurance?
- Further Considerations
What is Tenant Insurance, and Why Do I Need It?
Sometimes, people refer to tenant insurance as ‘renters insurance’. It is intended for those who don’t own their own personal property. Although it’s ultimately just another form of home insurance, it usually involves contents insurance, combined with personal liability protection, in the event of you being responsible for an incident that affects neighbouring properties.
Those who are renting won’t usually require property insurance, which is essential for most homeowners. In this circumstance, landlords are usually responsible for property insurance or anything that affects the structural integrity of a building.
If you are a tenant shopping around for insurance, the best deals and insurance quotes won’t necessarily come under the ‘tenant’ or ‘renter’ banner. For example, GasanMamo doesn’t use the term but still offers highly competitive deals for those in a tenant situation. Such a renters insurance policy is just a model of liability/contents insurance, after all.
Tenant insurance is optional but can provide reassurance to renters in case of emergencies or unfortunate situations. It will cover damage sustained to your landlord’s belongings and your personal contents in the event of theft or damage caused by leaks etc.
What Does a Renters Insurance Policy Cover?
If you’re living in a rental property, you’ll likely need two types of coverage, contents and liability:
This type of coverage should cover your personal belongings. To protect your personal belongings and ensure that you’re not paying too high a premium, list your personal possessions and estimate the item’s worth. That way, you’ll be reimbursed in the event of theft or fire.
Should you have any valuable belongings in your personal possession, it’s worth declaring these to your insurer. This is because you may need to pay a higher premium to guarantee their coverage.
Consider also if you need coverage for these items when they’re outside of the property, such as jewellery or musical instruments.
For an overview of insurance for your expensive items or more valuable items, read our post on The Importance of Art Insurance.
Personal Liability Coverage
Let’s say a fire occurs within your apartment that’s not your fault. Your landlord’s property insurance should cover the repair or replacement costs of any structural property damage.
Contents insurance should cover your own possessions. However, should the fire spread next door, you could be held liable and have to pay for any damages – unless you have liability insurance.
Such a policy can protect you against damage caused to neighbouring properties, as well as to their contents and/or person. Tenant liability coverage can offer financial protection for most legal expenses if a neighbour takes the matter to the courts.
What’s NOT Covered by Tenants Insurance?
Any form of home insurance – whether you’re a tenant or purchaser – has limitations. Your insurance policy will likely cover accidental damage caused by freak weather patterns. However, your insurer may not cover you for flooding unless you’ve specifically requested such insurance coverage. If you live in a high-risk area – close to a river or ocean, for example – then this is an issue to raise prior to agreeing on any policy.
Likewise, terrorism, acts of war, or some extreme weather events may not be covered by your own contents/liability insurance or a landlord insurance policy. Check the details of your policy, and be sure to understand the small print.
Any insurance also needs a dose of common sense added to it. Your insurance policy will likely include accidental damage cover. However, an ‘accident’ deemed deliberate – or occurring due to the influence of alcohol or other narcotics – will be classed as your responsibility.
So, insurance providers are unlikely to offer compensation if you return from a night out and decide to paint your apartment walls in a style akin to Jackson Pollock. Insurance exists to cover accidents and misfortune, not incidents inspired by too much joie de vivre.
Most tenants will find taking on a home insurance policy beneficial unless they have zero possessions.
Such premiums generally work out cheaper than a homeowner’s insurance cost. Yet they can save you a mighty headache – or an even mightier bill – should anything go wrong. The average renters insurance cover bill comes to £118 per annum, compared with nearly £300 for homeowners.
Before signing any deal, it’s worth considering the following:
Size Affects Cost
Generally, the larger the dwelling, the larger the premium. Although you won’t be paying personal property insurance, size could affect your liability payment because your neighbours are likely to have similar-sized properties.
A modern apartment with guards, CCTV, and a code system to enter the building is more secure than an old property with nothing but Yale locks on its doors.
Similarly, a place in a low-crime area experiences less crime compared to one with a high burglary rate. Choosing the right location for your home can affect insurance costs – consider this if you haven’t signed a tenant lease yet.
Your Insurance Record
Say, a few pyromaniac incidents on your record or previous insurance claims relating to your last apartment. In this case, an insurance company may charge a higher premium.
Rather than attempting to cover up your previous claims history, it’s better to be completely honest with an insurance provider. This is because any withheld information can work against you in future insurance claims.
Whether you’re buying a property or renting one, taking out some form of home insurance will likely benefit you. In addition to the peace of mind you’ll earn, you may find that your mortgage lender or landlord actually stipulates insurance.
A US study showed that their landlords require 75% of insured renters to obtain renter coverage as part of their rental agreement. Regardless, all tenants owning more than a solitary egg cup will do well to consider contents insurance and liability protection to save you from additional expenses should anything go wrong.
Begin your own search for the right plan by looking through our clear and transparent benefits on our home insurance page.
GasanMamo Insurance is authorised under the Insurance Business Act and regulated by the MFSA.