What is renters insurance?

TAMIKA SEETO
If you’re renting a house or an apartment, you might think that it’s only your landlord’s responsibility to look after things like insurance. After all, it’s usually your landlord you call when things go wrong with the house.

In reality, it’s actually your responsibility as a renter to take steps to protect your own belongings and ensure they’re properly insured. In the event of a natural disaster or break-in, not having insurance can be stressful and potentially leave you with a sizable dent in your bank account. Renters insurance is designed to provide a safety net if you find yourself in this situation and need help getting back on your feet financially.

Canstar answers some of the more commonly asked questions about renters insurance:

What is renters insurance?

Renters insurance is a type of contents insurance policy designed specifically for people who are renting a property. It works by covering all or part of the cost of repairing or replacing your belongings if they are stolen, damaged or destroyed due to certain events like fire, storm and theft. For example, if someone broke into a home you were renting and stole your TV, renters insurance would typically cover the cost of replacing it.

What is the difference between renters insurance and contents insurance?

In many cases, renters insurance is the same or very similar to a contents insurance policy. When applying for a quote for a contents insurance policy, you may just need to specify that you’re a tenant.

If you decide to apply for a policy advertised as ‘renters insurance’ be sure to check that it offers you enough cover. You can also consider a standard contents policy which may be more comprehensive, depending on the product.

Why might I need renters insurance?

When you are renting, the owner will generally take out landlord insurance or home insurance to protect the property. If it is a furnished property, the owner may also take out contents insurance to cover their items. While the owner is responsible for damage or loss to the physical property, fittings and any furniture they own, they are typically not responsible for any damage or loss that occurs to your personal belongings. It is usually your responsibility to protect your own items.

Given your belongings may not be otherwise protected, taking out a suitable insurance policy could be worth considering if you are a renter. Think about the cost of your furniture, electronics, clothes and other valuables – it could add up to more than you realise.

What does renters insurance cover?

Renters insurance covers the cost of repairing or replacing your belongings if they are damaged or destroyed by certain events. Generally speaking, you can insure all of your personal belongings, including furniture, appliances, electronics and clothes. But be sure to check if your policy has any exclusions before committing to it. For example, you may need to get additional cover for portable items such as your phone, laptop or jewellery.

Your provider might also put limits and sub-limits on what you can claim. For example, they could limit a jewellery claim to up to $1,000 per item. Therefore, you may want to insure particularly expensive items separately on your policy. But keep in mind, this may raise the price of your insurance.

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. For example, loss or damage caused by the impact of a motor vehicle or falling tree.
  • Legal liability cover, which is designed 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.
  • Food spoilage due to an insured event

Renters insurance may also provide you with temporary accommodation for a certain period of time if the rental property you live in is significantly damaged from an insured incident. You may also be able to add optional extras to your policy, such as portable contents cover, flood cover, accidental damage and motor burnout.

Do note, however, that renters insurance would generally not cover the cost of your rent if you were 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. This may pay part of your income to help you cover expenses such as rent if you are unable to work because of an injury or illness. However, it typically does not cover you if you’ve been stood down or have become unemployed.

How much does renters insurance cost?

The cost of renters 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 and where you live.

To give you an idea of cost, Canstar’s Research team calculated the average annual contents insurance premiums in various states across Australia for policies on our database, based on $50,000 worth of contents.

State Average annual premium
NSW $431
North QLD* $798
QLD $397
VIC $377
SA $336
TAS $313
WA $392

Source: www.canstar.com.au. Based on quotes obtained for Canstar’s 2020 Home & Contents Insurance Star Rating (September 2020). Premiums based on sum insured values $50,000 for contents. *North QLD is the portion of QLD north of Rockhampton.Bear in mind that these averages are based on contents insurance policies and not renters insurance policies specifically, but they may give you an idea of the cost of insuring your belongings, based on your location.

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. However, make sure you can afford to pay this amount, should you need to make a claim.

→ Related article: Home insurance discounts & deals currently on offer

Who offers renters insurance in Australia?

The following providers offer renters insurance in Australia. Bear in mind that some providers only operate in certain states and territories.

  • 1st for Women Insurance
  • AAMI
  • Allianz
  • Apia
  • Aussie
  • Bank of Melbourne
  • BankSA
  • Budget Direct
  • CCI Personal Insurance
  • CGU
  • Coles Insurance
  • CommInsure
  • Essentials by AAI
  • GIO
  • Hollard Australia
  • Huddle
  • Insurance 4 That
  • NRMA (NSW, Qld, ACT, Tas)
  • Ozicare
  • QBE
  • RAA (South Australia)
  • RAC (Western Australia)
  • RACQ
  • RACV (Vic)
  • RentCover Landlord Insurance
  • SGIC (SA)
  • SGIO (WA)
  • Shannons
  • St.George
  • Suncorp
  • Territory Insurance Office (NT)
  • Westpac
  • WFI

There are also some tenants’ contents insurance options offered through a broker for providers such as ACS Financial, Vero, IAL and AIG Australia.

Source: Insurance Council of Australia. Correct as at 20 July, 2021.

How do I calculate the value of my belongings?

Before taking out a policy, it is important to accurately estimate the total value of your possessions to ensure you’re properly covered. One way of doing this is by using an online contents calculator, such as the Insurance Council of Australia’s. It may be a good idea to use a calculator that asks a number of detailed questions to get a more accurate result. It could also be worth getting independent valuations for more expensive items.

Once you’ve purchased your insurance policy, make sure to keep a detailed record of your belongings in case you ever need to make a claim – things like receipts, photos and valuations could prove important. A detailed inventory may be essential to verify your losses and support your claim.

How will I be compensated by renters insurance?

When you make a successful claim, your insurer may repair or replace your damaged belongings or pay you the amount it would cost to repair or replace them.

Many providers offer ‘new for old’ replacement on covered items. This covers the full cost of replacing your belongings with new ones.

Alternatively, some providers may offer you the value of your lost or damaged belongings. The main difference is that this looks at what the item is worth at the time it is insured. For example, your laptop may be currently valued at $500, so you would only receive this amount. However, it may cost you more money to buy a new laptop that is of the same quality. Because ‘new for old’ replacement generally offers you a higher level of cover, the premiums may be more expensive than value replacement. Consider the terms and conditions for the policy carefully or contact your insurer to confirm whether a policy you’re considering will offer ‘new for old’ or value replacement cover for your items.

Can I get renters insurance if I am living in a share house?

Insurance policies typically don’t let you pick and choose which rooms to cover. This means you may not be able to just insure your room, and instead would need to take out insurance for the entire household.

Depending on whether or not your housemates want to chip in, you can either add or leave their stuff off the valuable items list. If you do choose to only cover your own belongings, this could help keep premiums low.

Additional reporting by Sean Callery. Main image source: GaudiLab (Shutterstock.com)


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