As the end of the financial year approaches, renters should review their insurance and make sure they're protected, especially as the cost of living continues to rise. While landlords have insurance covering the building and their property, tenants also have responsibilities when it comes to protecting their belongings and finances.
This article breaks down the key differences between landlord and building insurance (which your landlord manages), and why tenants should consider contents insurance.
What Insurance Does Your Landlord Have?
As a tenant, you might assume that insurance on the property you're living in covers everything inside it, but that’s not the case. Your landlord typically holds two types of insurance:
- Building Insurance: This covers the physical structure of the property: walls, roof, sheds, fences, and permanent fixtures like pipes or wiring.
- Landlord Insurance: This adds extra protection for the landlord, including cover for loss of rent if tenants default, damage caused to the property, and even legal liability if someone is injured and the property is deemed unsafe.
These policies are in place to protect your landlord’s investment, not your personal items. So, if there’s a fire, flood, or theft, your belongings are not automatically covered.
Why Tenants Need Contents Insurance
As a renter, it’s important to consider taking out contents insurance to protect your personal possessions. This type of insurance can cover the cost of replacing or repairing your belongings, such as your furniture, electronics, clothing, and other valuables, if they’re damaged or stolen.
Depending on your policy, contents insurance may also include cover for:
- Accidental damage
- Temporary accommodation if the rental becomes uninhabitable due to a covered event
- Legal liability if you unintentionally cause damage to the property
Peace of Mind When the Unexpected Happens
Even if your landlord has great insurance, it won’t protect what’s yours. Accidents and unexpected events—like a burst pipe, fire, or break-in—can happen, and without contents insurance, replacing your belongings could be a significant financial burden.
At the same time, make sure you're aware of your responsibilities under the tenancy agreement and know what to do in case of damage or emergencies. Communication with your landlord or property manager is key, but having your own insurance means you’re not left out of pocket if something goes wrong.
Disclaimer: This article is general in nature and not financial or legal advice. Please speak with a qualified adviser to understand what type of insurance and coverage is right for your situation.
