Your landlord’s building insurance policy provides cover for physical damage to the structure of the home caused by fire, flood or theft, but might not cover your contents as the renter. Discover the difference between building and home contents insurance and how that can affect you as a lessee
Most homeowners know that they need an insurance policy to protect their home in the event of a calamity like fire, flood or theft. In fact, mortgage lenders will insist on homeowners insurance if they are issuing a bond. An individual who rents a property however, is not obliged to get insurance and in many cases, they may assume that they are covered under the landlord’s policy. Unfortunately most renters only find out that they are not covered when they suffer a loss or damage to their property.
Homeowners insurance has two elements, structural cover and contents cover. A homeowner may opt to only insure the structure and not the contents, however, even if they insure their contents, your stuff will not be covered unless specified in the policy. If you are a renter and the building catches fire or has a structural failure that damages your possessions, you have no claim against the landlord. If you have a break-in and your things are stolen, the only obligation the landlord has is to secure new locks and/or repair damage to the building.
You may think that you can absorb a loss because technically you don’t own a lot, but if you add up the replacement cost of all of your possessions, it will come to a sizeable amount.
The protection afforded by a renters insurance policy applies to certain risks, such as fire, structural mishaps and theft. So, if your laptop is stolen, or your furniture and clothing are destroyed by a fire, this coverage may help you pay for the cost of replacing them. You need to read the policy fine print to know exactly what you are covered for. When purchasing a renters insurance policy, you will be required to specify high risk items like a bicycle, phone or expensive jewellery.
Liability coverage is another option you should consider, this cover will help protect you from bills if you are found to be legally responsible for injuries to other people, or damage to their property. It’s a rare occurrence but say for example your child throws a toy and it causes injury to a third party, you will have to pay the medical bills.
If your rented home is damaged to a point where it is no longer liveable, renters insurance can help because many policies cover you for extra living expenses if you need to relocate while the property is being fixed. As with all insurance policies, limits will apply to the amount a policy will pay out for a covered loss. Take the time to read your policy and make sure it is geared to your specific needs