Roasting old chestnuts: Why renters need contents insurance

Chestnut: Landlord has insurance

Roasted: Many renters assume that their landlord’s insurance will cover their possessions in the event of a fire or burglary, but this is not the case.

Although the home may be insured by the landlord (landlord cover, building cover or strata cover), that cover does not extend to home contents owned by the tenant.

A landlord is only liable for a tenant’s losses if they are found to be negligent in some way.

Another thing that the tenant needs to think about is liability. While the landlord is responsible for ensuring that the home is properly maintained and safe, and will be liable if a tenant or their guest is injured on the premises as a result of negligence, there are circumstances where liability for losses falls to the tenant. This is known as occupiers’ liability.

A tenant can face liability for damage or injury if they fail to maintain a safe environment for anyone who comes onto the property. Medical costs, lost wages or business earnings, compensation for pain and suffering, and even legal costs can all be awarded to someone injured on a premises – and the tenant can be expected to foot the bill if they are derelict in their duty of care.

Chestnut: Nothing worth stealing

Roasted: It is estimated that when a person first moves out of the family home into a rental, they have about $15,000 worth of possessions – this rapidly climbs as they accumulate more over the years.

Some renters are less likely to have the same quantity of furniture or ‘homewares’ (appliances, kitchenalia etc) as a home owner, but they are just a likely to own electronics (mobile phone, laptop, TV etc) and personal goods such as clothing, accessories, books, bedding, bikes, jewellery and the like.

In fact, Money Magazine reported that one in five renters admit to owning an item in their wardrobe worth $1,000 or more, and about one-third value their wardrobes at over $5,000.

The statistics put paid to the idea that renters “have nothing worth stealing”, and therefore, insuring. Simple fact: if their possessions are damaged or stolen, the cost to replace those items quickly adds up.

A recent TenantCover claim saw a policyholder’s home broken into and some of their contents were stolen. Among the items pilfered were an SLR camera, a MacBook computer, a $5,000 clarinet and even their diabetes medication. Although only a handful of items were stolen, the claim totalled $10,500.

As a property manager, you can’t force a tenant to take out contents insurance, but you can explain the value of the cover to help them avoid getting their fingers burnt if they suffer from an uninsured loss.

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