What is renters' insurance?
Renters' insurance, sometimes called tenants' insurance, is a type of contents insurance policy for people who are renting a property. When renting, rather than your landlord, you will be responsible for insuring your own possessions against loss or damage.
How does renters' insurance work?
Renters' insurance protects your personal belongings (like furniture and electronics) if they are damaged or destroyed. It differs from standard contents insurance in that it can also cover you for accidental damage to some fixtures owned by the landlord, like carpets and curtains. When it comes to your contents, renters' insurance can work in two ways:
New for old cover
This covers the full cost of replacing your belongings with similar new items. Because this generally offers you a higher level of cover, the premiums may be more expensive than value replacement.
Value replacement cover
Some providers may offer you the value of your lost or damaged belongings, based on what they were worth at the time they were insured. For example, a laptop valued at $500 when you bought the insurance would only be reimbursed for $500 if lost or damaged, even if a new one costs more.
How do you get renters' insurance?
You can typically apply for renters' insurance over the phone or online, as you would when obtaining a standard contents insurance quote. When applying, you may simply need to specify that you’re a tenant. Some insurers also market policies specifically as ‘renters' insurance’ or 'tenants' insurance'. If you choose one of these, check that it provides enough cover for your needs. In some cases, a standard contents policy may be more comprehensive, depending on the product.
What does renters' insurance cover?
Renters' insurance typically protects your possessions against events such as:
- Fire
- Theft
- Storm, hail, cyclone, rainwater and water from leaking pipes
- Accidental breakage of glass or ceramics
- Lightning
- Earthquakes and tsunamis
- Impact damage, such as loss or damage caused by the impact of a motor vehicle or falling tree
- Food spoilage due to an insured event
- Cost of temporary accommodation if the property becomes uninhabitable due to an insured event
In addition to protecting your belongings, renters' insurance may also include:
- Legal liability cover, to protect you financially if someone takes legal action against you as a result of an incident that occurred at the property you are renting
- Optional extras to your policy, such as portable contents cover to protect items like jewellery when worn outside your home
- Flood cover
- Accidental damage cover
- Motor burnout cover
Does renters' insurance cover damage caused by pets?
Damage caused by pets to your belongings
Most renters' insurance policies don’t cover damage your pets cause to your own belongings, such as chewed furniture. But some insurers may offer a pet add-on that can help cover accidental damage caused by pets, like items being knocked over.
Legal liability cover for dog bites and accidents
Renters' insurance often includes legal liability cover, which can protect you if your pet bites or injures someone at your rental property.
What doesn’t renters' insurance cover?
When comparing insurance policies, make sure to check the exclusions. While these can vary between insurers, some common exclusions include:
- The building itself and its permanent fixtures
- Flood, storm, or bushfire damage in the first 72 hours after policy purchase.
- Any damage due to gradual wear and tear
- Damage from pests like rats and mice
- Deliberate damage or illegal acts
Does renters' insurance cover your rent payments?
No, renters' insurance does not cover the cost of your rent if you are unable to pay it due to a drop in your income. If you are looking for insurance that covers you for loss of earnings, you may want to consider income protection insurance.
Why do you need renters' insurance?
If your belongings were damaged or destroyed, could you afford to replace them yourself? If not, renters' insurance can help cover the costs if something happens.
Some insurers also let you cover only specific high-value items, like a mobile phone or jewellery, which can be useful if you don’t need protection for everything in your home.
How much does renters' insurance cost?
The cost of insurance can vary depending on factors, such as:
- How much coverage you decide to take out
- Your excess
- Whether you decide to add any optional extras
- Your claims history
- Where you live
You may be able to get a discount on contents insurance if you buy your policy online.
Another way to potentially lower your premiums is to increase your excess. Typically, the higher your excess, the lower your premiums. But make sure you can afford to pay this amount, should you need to make a claim.
How do I determine how much cover I need?
To work out how much renters' insurance cover you need:
1. Estimate the value of your belongings
Work out the total value of the items you want covered. You may use an online contents calculator, such as the Insurance Council of Australia’s.
2. Check limits and sub-limits
Review the policy’s limits and sub-limits, as claims for certain items may be capped.
You may want to list particularly expensive items separately on your policy, but this can increase your premiums.
3. Review your cover regularly
Update your cover from time to time to make sure it still reflects the value of your belongings, especially after major purchases.
4. Keep good records
Maintain a detailed inventory of your belongings, including receipts, photos and valuations, to support any future claims. Independent valuations can also be useful for high-value items.
Can I get renters' insurance if I live in a share house?
Insurance policies usually don’t allow you to cover just one room, so you may need to take out a policy for the entire household. However, if your housemates don’t want to contribute, you can choose a lower sum insured that covers only your belongings. This can help keep premiums lower.
Which is the best renters' insurance in Australia?
The ‘best’ renters' insurance is a subjective question, as it’s based on your individual needs and finances. To find the best policy for you, you, consider the following steps:
- Work out how much your belongings are worth
- Do you have any expensive and/or portable items to insure?
- Would you prefer new for old replacement or value replacement cover?
- Do you want extra cover, such as temporary accommodation?
- Get quotes from a range of different insurers
- Consider whether it could be worth adjusting the excess or extras to affect the premiums
- Compare the costs and benefits of each quote before making a final decision.
