TENANTS beware - your landlord's insurance does not cover you

Tenants beware – your landlord’s insurance does not cover you

Tenants are often under the misconception that their belongings are covered by landlord’s insurance. This is however, not the case, and tenants need to have their own household content policy.

Fires in several high-rise residential buildings recently have highlighted the fact that even when you are renting a home, you still need to insure your own belongings – like furniture, clothes, jewellery and computers – against loss in the event of crime or disaster

“In managing thousands of rental properties,” says Andrew Schaefer, MD of national property management company Trafalgar*, “we find that tenants often have insurance for their cars, but no cover for the goods inside their homes or even the electronic items like cell phones and laptops that they carry around with them.

“This usually arises from a misunderstanding about what is covered by the landlord’s building insurance, or the insurance that is jointly paid for by the owners in a sectional title scheme to cover the actual structures. However, it is an oversight that could potentially prove extremely costly.”

Unless you have your own household contents policy, he explains, you are unlikely to receive any compensation if your belongings are stolen. “In addition, you are unlikely to have any liability cover to provide protection in case someone is hurt when visiting you or working in your home, and that could put all your current and future earnings at risk.

“Most household contents policies include third party liability cover for this reason, at a very small additional premium, and it is well worth having, especially if you have pets.”

Schaefer says tenants living in highly secure apartment buildings or sectional title complexes may argue that they don’t need insurance because the risk of being burgled is so low, “but they forget about the risk of another resident being negligent and causing a fire in the complex, for example, or their upstairs neighbour leaving a tap running and causing their home to be flooded.

“Sectional title schemes are also not immune to lightning strikes, electrical faults and other disasters, and in such cases the body corporate insurance would only cover structural damage to the exterior of the buildings in the scheme. Residents without their own household contents insurance would thus receive no payout for anything else damaged or destroyed, from couches, curtains and carpets to clothes, appliances, electronics and sports equipment.

“That would be a severe blow, especially for young tenants who are just starting out in life and really can’t afford to replace a lot of expensive items all at once - and one that could easily have been avoided for a relatively low monthly cost.”

Indeed, he says, it is a good idea for all tenants to take an inventory of their belongings, work out the total cost of replacing all those items, and then ask themselves if they can really afford not to be properly insured. “To work out what to include in that inventory, the easiest way is to imagine your home being turned upside-down and then simply listing every single thing that would fall to the floor if that were really to happen.”