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Renters Insurance and Why You Need It When Renting in Australia

As a tenant, you are responsible for anything in your home that you own and sometimes things happen. Whether it’s fire, robbery, natural disaster, or something else, it can be expensive to replace all your goods and valuables should something happen to them. Thankfully, with renters insurance, you can have some peace of mind knowing should the unforeseeable occur, your valuable items will be replaced at no additional cost to you. To find out why renters insurance is important, why you should consider it, continue to read below.

What is renters insurance?

Renters insurance is a type of contents insurance specifically for tenants who are renting a property. When renting a home, both the tenant and landlord/property manager have some responsibility. While the landlord is responsible for the building, and anything inside that they own (such as appliances or furniture if included) as the tenant, you are responsible for anything inside those four walls that you own. Most tenants assume that any home or contents insurance their landlord takes out will cover them too. However, your electronics, jewellery, clothes, everything that you own is your responsibility and, in case of a robbery, fire, or another unforeseen event, replacing these possessions is also your responsibility.

Thankfully with renters insurance, anything damaged or stolen that needs to be repaired or replaced can be, without you needing to pay for it out-of-pocket.

Renting in Australia? Discover what you need to know about renting for the first time, submitting a rental application, what should be included in a residential tenancy agreement, and more with Selectra's guides about renting a home.

Do I need renters insurance?

You probably have a lot more valuable things than you realise, as it’s easy to underestimate what you actually have in your home. In fact, according to the Australian Bureau of Statistics, from 2010 to 2018, the average value of an Australian household’s contents and home goods jumped from around $60,000 to nearly $70,000!

If something were to happen to your things, would you be able to cover that $70,000 out of pocket? Unfortunately, most people just can’t afford that and while we think we will never be the ones put in this position, things do happen. By covering even some of your most valuable contents (electronics, jewellery, and expensive appliances for example) with renters insurance, on the off chance of an emergency or robbery, you wouldn’t need to worry about footing the bill too.

How does renters insurance work?

When a tenant wants to take out a renters insurance policy, they must first take an accurate estimate of the value of the contents in their home (that they want covered). You don’t need to cover everything in your home if you don’t want to, or you can choose to make sure everything you own is included in the coverage.

Once you have an accurate estimate of the value of your contents, you can purchase your insurance policy. During the time of your policy’s coverage, it’s important to get, and keep, a detailed record of your belongings. Things such as photos, receipts, or valuations will all be important should you ever need to make a claim.

There are typically two ways an insurance provider will compensate you in case you ever need to make a claim, either by directly repairing or replacing your items or paying you the equivalent amount. This could be either:

 Your insurance provider might offer “new for old”, meaning they will fully replace your covered items with new ones. If you have an old laptop that is currently valued at $300, but to buy a new one of similar quality is $800, your insurance will cover the total cost of a new one. This is what most insurance providers offer, but this type of coverage and compensation usually comes with higher premiums.

 Some insurance providers, however, will only compensate you for the value of your things currently. If it costs $800 for a new laptop, but yours was only valued at $300, then the insurance provider will only give you $300.

It’s always important to check what type of compensation your insurance provider offers, as no one wants to be told after an emergency that their insurance won’t cover the full cost of a new laptop, phone, or anything else.

What does renters insurance cover?

Renters insurance generally covers all personal belongings inside your home such as:

  • Furniture
  • Home appliances/whitegoods
  • Electronics
  • Clothes
  • Jewellery
  • Shoes
  • Laptop

However, it’s important to check for any exclusions on your policy before signing. Some insurance providers might not cover portable items (jewellery or your phone or laptop, for example), in which case you might need additional coverage.

When it comes to these items, renters insurance generally covers unforeseen events such as natural disasters, fire, or theft. Standard renters insurance policies may cover damage from:

  • Fire
  • Storm, lightning, or rainwater damage
  • Explosion or earthquakes
  • Theft or attempted theft
  • Malicious damage or vandalism
  • Liquid or water damage
  • Accidental breakage of glass or ceramics
  • Damage caused while moving house

Obviously, all policies differ and some higher-level policies might offer additional coverage for a wider range of events or circumstances. This includes things such as food spoilage if your fridge stops working, temporary accommodation if your home is significantly damaged, or additional coverage for things such as bikes or lawn mowers left outside of the actual home.

You might be able to also get additional, optional, coverage for an extra cost, such as specific insurance for personal effects (ie: items you regularly take with you like phone or laptop) or flood cover.

Some policies might have limits on how much you can claim for specific items or a type of item (such as $1,000 for all jewellery) but you might be able to add cover for specific contents that are outside of these limits (eg: adding additional jewellery coverage for a $10,000 family heirloom you got from Great Aunt Martha) at an extra cost.

How to calculate the value of your possessions for renters insurance

If you’re interested in renters insurance (and if you’re a renter, you should be considering it at this point) your first step is to calculate the value of your possessions. This might seem like a daunting task, but is well worth it for the peace of mind it brings.

 Go room-by-room and make a list of everything. Write it down systematically, and don’t leave anything off your list. Things such as clothing or shoes might not seem valuable for each individual item, but if everything were to get damaged in a storm it adds up when you need to replace every pair of pants and every shirt in your closet.

 Get important items valued independently. That $10,000 family heirloom necklace from your Great Aunt Martha? Take it to get valued by a jeweler and keep any records from the valuation. If something were to happen to it, having the actual records will make a claim much easier.

 Update the list anytime you make a new big purchase - a new TV, some art, another $10,000 necklace from Great Aunt Martha. Any time you add something to your home, check to be sure you don’t need to increase the insured value.

 Take photos and keep receipts for a more accurate list. This will make proving a claim easier, and you’re more likely to get paid out the correct amount, more quickly.

How much does renters insurance cost?

Like anything else, the cost of renters insurance really depends on a number of different factors that affect the security of your home. These include:

  • Where you live, the crime rate of the neighborhood, and any history of theft or claims at your current address
  • The total estimated value of your contents
  • The risk of natural disaster (for example, if you live in a flood zone or wildfire-prone area)
  • Your home’s security, age, and general structure

Due to the varied nature of these factors, the cost of renters insurance in Australia can be as little as a couple hundred a year, to over a couple thousand. However, there are a few ways to lower the cost of your premium such as asking your landlord to replace the locks on doors and windows and add a security system, and taking out a higher excess (the amount you pay when making a claim).

Renters insurance with roommates

If you’re taking out a room, rather than a whole house or unit, you still need to take out a policy for the entire house. Renters insurance policies don’t typically let you cover just a specific room. However, you can choose to either only add your valuable items to the valuable items list, or your roommates can chip in, and everyone’s valuable items can get covered.

Many renters insurance policies won’t cover theft by roommates, so carefully read your policy if you live with roommates you might not know.

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