Tenant Insurance: What You Need to Know

September 5, 2014

Blue door of a homeIf you are currently renting or planning to rent in the near future, it’s important that you consider purchasing tenants insurance. Renters insurance is relatively affordable and protects you against the unexpected. This article will help you understand your responsibilities as a tenant, why tenant insurance is important and the types of insurance available.

Tenant insurance protects your belongings

You’re probably familiar with the concept of “contents insurance.” Insurance plans that are designed with tenants in mind will cover the value of your property up to a set limit. When you’re choosing a plan, be sure to pick one that adequately covers the value of the items you have inside and/or on your rental property. This includes the combined value of clothing, kitchen appliances, electronics, computers, sporting gear and home gyms, garden appliances and everything else in your home.

In the event of an unforeseen situation, such as an earthquake, flood, fire or robbery, your contents insurance will allow you to replace damaged or lost items at no cost to you. While your landlord is required by law to have their own insurance policy, their policy will not cover damage to or theft of your goods.

Tenant insurance covers damage to the rental property

Some tenants, especially students or younger tenants, don’t think they own anything that is valuable enough to be insured and conclude that they do not need renters insurance. While the actual value of your belongings may be low, be aware that tenants insurance includes liability insurance, which provides cover in the event that you cause damage to the property. Coverage also extends to guests or visitors (such as a repair person or cleaning service) in your home who cause damage.

This is an extremely important aspect of tenants insurance. In a report about the importance of tenant insurance, The New Zealand Herald describes a real situation in which a group of Auckland students was faced with a $26,000 repair bill after a mishap caused flooding in their apartment.  Although the damage was only caused by one student, the three flatmates were held equally liable for the damage as their signatures were all on the tenancy agreement. Fortunately, one of the students had insurance that covered them for legal liability up to $1 million, so the insurance company covered the cost of the damage.

Accidents happen. If your rental property is damaged by something that you or a guest in your home has done – intentionally or not – you will be held responsible. Don’t assume that your landlord’s insurance will cover the damage. Landlords have insurance to protect their investments, but if you cause the damage, their insurance company will hold you liable and you will be responsible for the cost of repairs and replacing damaged property.

Tenant Protection Insurance: protection when times get tough

Tenant Protection Insurance (TPI) is a type of insurance designed to protect those living in rental accommodation. It is completely different from contents insurance, so a TPI policy should be considered in addition to contents insurance, rather than as a replacement for this important type of insurance.

Tenant Protection Insurance covers your rent if an accident or illness prevents you from working or if you lose your job through no fault of your own. Without this type of insurance, your savings could be quickly drained and you could find yourself in debt. In the worst case scenario, you could find yourself without a home as a result of an unfortunate event.

As property managers in Christchurch, we especially encourage our tenants to consider TPI due to the extremely competitive nature of the Christchurch rental market. You cannot assume that you’ll easily find a suitable property once you are on your feet again – let alone one that is in the same school district and/or near your workplace. Tenant Protection Insurance will keep you and your family in your home while you recover from your injury, illness or find a new job.

We have had quite a few tenants sign up with Southsure for TPI, as they provide a comprehensive plan that includes term life cover and pays out on top of any additional Income Protection or ACC entitlement. We’re happy to provide additional information about Southsure or put you in touch with our contact there.

Who needs renters insurance?

The simple answer is everyone. If you live in rental accommodation, then it’s important to protect yourself and your belongings by purchasing tenant insurance. Renters insurance is equally important for flatmates or other renters whose names are not on the lease. You should also consider Tenant Protect Insurance in the event that you cannot work and become unable to pay rent.

Learn more

New Zealand’s Department of Building and Housing provides additional information about insurance policies for tenants. Most banks offer contents insurance, so ask about a policy the next time you’re in your local branch. AA is another popular choice for tenants insurance.

If you’re interested in renting one of our properties, we’ll also be happy to answer any questions and address any concerns you may have about tenants insurance.

 

 

 

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