Tenant’s Insurance – All You Need To Know

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If you’re living in rented accommodation, you might think insurance is your landlord’s responsibility, but that’s not the case – at least as far as your belongings are concerned. Making sure your possessions are adequately protected against damage and theft is down to you.

This is where tenant’s insurance comes in.

What is tenant’s insurance?

Tenant’s insurance is simply contents insurance for someone who is renting their accommodation. It protects your personal possessions against theft or damage caused by fire or flooding and will help ensure you don’t end up footing the bill if disaster strikes.

Despite the financial safety net it can provide, figures from Nationwide building society reveal that around half of UK renters do not have tenant’s insurance in place. And nearly a fifth mistakenly believe it’s their landlord’s responsibility to arrange contents cover.

In reality, landlords are only responsible for arranging the buildings insurance for the property you are living in, as well as insurance for any furniture or other items they include for your use as part of the rental agreement.

Buildings cover, as the name suggests, protects the structure of the building, as well as permanent fixtures and fittings such as built-in wardrobes, kitchens and bathrooms. The landlord’s contents insurance will cover furniture and white goods such as the fridge and washing machine, if they are provided.

It’s up to you, the tenant, to arrange separate contents insurance to protect your own personal belongings.

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Do I need tenant’s insurance?

There’s no legal requirement to have tenant’s insurance – it’s completely up to you whether you buy a policy.

But taking out tenant’s insurance is the only way to ensure you wouldn’t be left out of pocket if your personal possessions were damaged or stolen. Having a policy will allow you to recover the costs of replacing those items from your insurer. 

What does tenants insurance cover?

The type of cover provided through a tenant’s insurance policy will vary depending on the insurer. But your belongings will typically be covered for damage caused by the following events:

  • fire
  • burst pipes and water leaks
  • flooding
  • storms
  • earthquakes
  • riots and vandalism
  • subsidence
  • theft – providing there are signs of forced entry.

Some policies alsocover the cost of replacing spoiled food if your freezer breaks down or if there is a power cut, and some provide cover for cash stolen from the property.

Many policies also include tenant’s liability insurance. This covers repair or replacement costs if you accidentally damage items provided by your landlord in the property, such as furniture or white goods.

What does tenant’s insurance exclude?

Always read your policy documents carefully to check what won’t be covered under tenant’s insurance. Common exclusions include:

  • damage caused by wear and tear
  • theft or damage caused by unforced entry – for example, if you were burgled due to leaving a window open or a door unlocked. If you invite people into your home and something is stolen, you would not be able to make a successful claim
  • damage caused after leaving a property unoccupied for more than 30 days
  • theft or damage of items worth more than the single-item limit* – often around £1,500 (unless they’ve been named separately on your policy)
  • Theft or damage to home business belongings (you’ll need business insurance for these)
  • Possessions taken outside the home, such as laptops and mobile phones.

* The ‘single item limit’ is the most the policy will pay out for any one of your possessions – and there may be a total amount the policy will pay for such possessions. So, for example, you might only be able to claim for four items at the single item limit at any one time. If you own something worth more than the single item limit, you can list it separately on the policy, along with its value. This might make your premiums higher.

Can I choose additional cover for tenant’s insurance?

You’ll usually be able to pay extra to bolt on the following cover options to your policy if they are not included as standard:

Accidental damage cover Protecting you for accidents such as smashing your TV screen or spilling wine on the sofa.

Personal possessions cover Providing cover for items taken outside the home, such as mobile phones, laptops and tablets.Some policies will even extend this cover abroad, but it may be limited to certain countries only.

Legal expenses cover Covering the cost of legal proceedings if you need to dispute a claim.

Tenant’s liability cover Could prevent you from losing your security deposit if you accidentally damage your landlord’s property.

Am I covered if I share a house with others?

This is where it can get a little tricky. Insurers are usually more reluctant to provide cover for those living in a flat-share or house-share as there’s a greater risk of damage or theft due the number of different people going in and out of the property.

As a result, many insurers will limit cover to room-only. This means only belongings kept in your own room will be protected. Insurers will usually insist that you have a lock fitted on your door and your door must be locked whenever you are not at home.  

Alternatively, you may be able to take out a joint contents insurance policy with your housemates. The downside is that if one of you makes a claim, everyone else’s premium will go up when you renew. You’ll also have to declare the claim on any new policy taken out over the following five years.

How much cover do I need?

Working out how much cover you need isn’t easy but it’s important to get it right.

If you overestimate, you’ll end up paying more for your policy than necessary. If you underestimate you’ll be underinsured, and your insurer may only pay out a percentage of any claim you make.

The easiest way to calculate the value of your belongings is to go around each room in your home and make a list of all your possessions. Then tot up how much they are worth in total.

Items that have been provided by your landlord – such as carpets, curtains, electrical goods or furniture – should be covered under your landlord’s own insurance policy. But as mentioned earlier, having tenant’s liability insurance will make sure you’re covered in the event you accidentally damage them.

Your landlord’s insurance may also provide alternative accommodation cover, allowing you to stay elsewhere if the property needs urgent repairs or is otherwise uninhabitable because of an unexpected and unavoidable event, such as flooding.

How can I reduce the cost of tenants insurance?

As with any type of insurance policy, there are several steps you can take to help lower your premiums:

Pay annually

Paying for your policy in one go each year will be cheaper than paying in monthly instalments when interest is usually added. If you can’t afford to pay upfront, consider using a 0% purchase credit card to spread the payments interest-free over a number of months. Make sure you’ve cleared the balance before your 12-month policy ends, however, so that you don’t end up paying for two lots of insurance at the same time.

Choose a higher voluntary excess

The excess is the amount you’ll need to pay towards the cost of a claim and the higher it is, the lower your premiums will be. Just make sure it’s still within your budget, otherwise the money you receive from the insurer might not be enough to replace everything you’ve lost.

Consider extras carefully

When looking at additional cover options, only pick those you think you might benefit from so that you keep costs down.

Improve security

Talk to your landlord to see whether he/she would be willing to install stronger locks on windows and doors or get an alarm fitted. As well as reducing your own insurance premiums, this could lower your landlord’s insurance premiums too. 

Forbes Marketplace Operations is an Introducer Appointed Representative (IAR) of Seopa Ltd.

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