The number of people renting is steadily increasing, especially among younger people in highly-populated urban areas. As the number of renters increases, this has a counter-effect on the number of people needing comprehensive home insurance. But if an accident occurs on the rented premises, or part of the property is damaged, who is liable to pay the costs?
Traditional home and contents insurance is normally taken out by homeowners living in owner-occupied properties. This will generally cover any significant damage caused to their property, damage and theft to personal belongings, and accidents caused on the premises. In some cases, coverage can also be extended to older children of the policyholder if they are away studying at university. As a homeowner, they are the ones responsible for covering everything from the structure of the property to the items within it.
When someone rents a property, taking out a home insurance policy is obviously not necessary as they do not own it. Due to this, more and more people are deeming insurance an unnecessary expense and not taking other risks into consideration. Contents insurance is still advised as a landlord is not responsible for compensating their tenant in the case of a burglary, loss or damage to personal property. And while the landlord is responsible for the general maintenance of a rented property, any other damage will also need to be covered. But who by?
As a tenant, renting a property may not always be as straightforward as leasing a property and taking accountability for everything within it. If there are several different tenants in one building it is just as possible to share one overall policy as it is to have separate ones for each. Separate tenants contents insurance will obviously be more expensive than sharing an overall policy, especially when determining the cause of damage or theft if another tenant is at fault in a way that is excluded from the policy. However, with the increase of home-sharing, and tenants coming in and out of the same property like a revolving door, it is not always possible to share an overall policy if there is a lack of stability in occupancy. In this case each roommate’s individual policy is exclusive to them and does not extend to any other person inhabiting the same property. Tenants may also want more peace of mind that their valuables are covered if they are living in a house full of strangers.
As many shared or rented properties come furnished this means that the contents insurance will only apply to the tenants’ personal belongings. Despite not owning expensive furniture or fixtures, tenants may still have electrical appliances (eg laptops, televisions or games consoles), clothing or other valuable items they may wish to cover. This may also apply to some tenants who live in the same property as their landlord. If their insurance does not include tenants then a separate policy for their lodger will also be required. Whether overall or separate policies are taken out, tenant contents insurance is the very minimum protection that anyone renting should purchase.
One of the most common assumptions by tenants is that any damage caused to the property or furnishings will be covered by the deposit initially paid at the beginning of their lease. While this may be true in many cases, sometimes the amount of damage caused is more than the deposit amount. Deposits only tend to cover wear and tear or minor breakages, not large-scale damage. If a tenant floods the bathroom or accidentally starts a fire in the kitchen then a costly amount of repairs will be needed. Despite some landlords taking out their own insurance policies covering this, it is usually the tenant who is responsible, as part of the tenancy agreement, to pay for any damage caused. More providers are now promoting tenancy liability insurance as a way for tenants to take out financial protection not just for their contents but their liability as a tenant too. This way if a tenant accidentally damages any non-owned furniture or fixtures, they are then covered for the costs of any repairs needed. Living expenses may also be included if the tenant needs to vacate the premises for a short period of time while damages caused by them are repaired.
Tenant liability is not just concerned with theft and damage, but also any injuries incurred on the premises. If a visitor slips and falls on the premises due to a loose rug or wet floor then the tenant may be liable. Medical bills and lost wages may need to be reimbursed which can covered under a comprehensive tenant liability policy.
Unlike home insurance, a tenancy liability policy can be transferable between properties. This means that a tenant only has to pay the agreed monthly amount but can move into several consecutive properties without it affecting the total amount, unless they want to increase the amount of coverage required.
Just because a tenant doesn’t own their property doesn’t mean they have nothing worth insuring or are not liable for any accidents occurring during their lease. A monthly fee costs much less than what most people think and could save renters a lot of money if something needs to be repaired or replaced.
You can browse our current range of Tenant products here.
Other pages of interest:
RSA offers advice to cottage renters by Insurance Business on July 13, 2017
What you need to know about renter's insurance by Caley Ramsay at Global News on July 26, 2014
Do renter's need insurance? by Jenifer Brown at The Star on August 16, 2011