Tenant Insurance Explained
Tenant insurance: what exactly is it, and do you really need it? Find out everything you need to know to keep you and your valuables covered!
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Both landlords and tenants have various responsibilities when dealing with rented accommodation. Part of that involves protecting not only the property itself, but all of the items contained inside. Tenant insurance is an important part of the puzzle. But with so many different policies available it's not always the most straightforward. Who is responsible for tenant insurance? And is it really necessary?
In this post, we'll break down the key information, including what is and isn't covered, so you can decide whether tenant insurance is right for you.
The Two Types Of Tenant Insurance
Tenant insurance is actually an umbrella term that can refer to two different kinds of insurance. While most insurers will offer both kinds of coverage in the same policy, it's good to know the difference between the two. That way, you'll know exactly what you need and what you are covered for.
Tenants Liability Insurance
As a tenant, it is your responsibility to take care of your rented accommodation. However, accidents happen, and tenants liability insurance is designed to protect you in the event of unintentional damage to your landlord's belongings. This includes things like furniture, white goods, carpets, soft furnishings, integrated appliances and fixtures and fittings.
Tenant liability insurance can be a great way to protect you against deposit deductions. Having cover in place can cover costs for any accidental damage as it happens. If items like the sofa or fridge need to be replaced or repaired, paying out of your own pocket could prove very expensive. Having tenant liability insurance helps to minimise the chances of any deposit disputes and a larger payout at the end of your tenancy.
It's important to note here that tenants liability insurance is for accidental damage only. The policy does not cover theft and any damage caused intentionally (or through wear and tear).
Tenants Contents Insurance
This type of insurance is designed to protect a tenant's personal belongings as opposed to the landlord's. This will typically include everything from furniture and soft furnishings to clothes and electrical equipment. Also, unlike liability insurance, contents insurance isn't normally geared towards accidental damage (more on this below). Instead, it offers protection against theft and damage due to floods, fires, storms, burst pipes and subsidence.
Tenant contents insurance will not cover damage due to wear and tear or theft if there are no signs of forced entry. This is because, by failing to secure the property, you would be in breach of the insurance agreements and so your policy would no longer be valid.
Optional Extras For Tenant Insurance
With both kinds of tenant insurance there are certain circumstances that fall outside of the policy's cover. It's extremely important to be aware of any exclusions to avoid getting left out of pocket. However, many of the scenarios that aren't covered can often be added to your policy for an additional charge. Here are some optional extras you might like to consider.
Most contents insurance policies will only cover items while they are inside the home. This is also the case for items like mobile phones and bicycles, even though they are designed to be portable.If you would like additional cover, you can usually get an 'all risks' or 'personal possessions' add-on. This will extend the policy to cover items outside the home and even abroad. Even with the add-on there are often still limits in place, so double check the fine print to make sure you have adequate cover.
If you damage your items unintentionally, most contents policies will cover this up to a certain extent. It will typically only be for damage to things like TVs or computers. However, it does not usually include accidents like unintentionally spilling a drink on your sofa. Full accidental damage cover should protect you for all kinds of incidents. If you have young children, pets or are particularly clumsy, you may want to add it to your policy to help protect your belongings.
Contents policies will usually only cover items up to a certain value (typically around £1500). Anything over that amount is considered a high-value item and usually requires extra cover. Certain items like bicycles, tablets and mobile phones may also fall into this category even if they were less expensive.
In this instance, you will usually have to take out extra cover to protect the item against theft and damage. If you purchase any high value item after you've taken out the policy, be sure to let your insurer know as it may not automatically be covered.
If you run a business or work from home, then you may need a different type of insurance to protect your equipment (such as a work laptop). Business contents insurance is designed specifically for this purpose, and any items that apply to your business will likely not be covered by regular tenant content insurance. If you do run a business from your rented accommodation, you must also make sure to let your insurer know. Not doing so could invalidate your policy.
Who Is Responsible For Tenant Insurance?
All landlords have certain obligations when renting out a property, including having the proper insurance in place. Landlords are usually required to have buildings insurance. They may also have contents insurance or specialised landlord insurance in place.
Buildings insurance is there to protect any damage to the building itself, including things like the roof, windows, floors and walls. It is always down to the landlord, not the tenant, to arrange building insurance (and is usually a prerequisite to obtaining a mortgage). However, any contents insurance a landlord takes out is only for items they have provided.
For example, the rental property may come with a dishwasher or sofa that the landlord has purchased. As tenant insurance is designed to cover the resident's belongings, it is the tenant's responsibility to arrange cover.
Do I Need Tenant Insurance?
There is no legal obligation for renters to have tenant insurance. However, for many tenants, getting insurance is a wise decision that will help protect themselves and their possessions. According to research, the average UK household contains ¬£35,000 of belongings. With tenant insurance available at just a fraction of the cost, it often makes financial sense to have cover. Whether or not you decide to get tenant insurance will depend on your personal circumstances, opinions and budget.
For instance, you may not have a lot of possessions, or have mostly inexpensive second hand items. In this instance, you may not think that tenant insurance is worth it. However, if you are renting a furnished property, tenant liability insurance may still be something to consider.
There is no right or wrong answer when it comes to tenant insurance and it is ultimately a personal choice. Even if you don't take out insurance at the start of the tenancy, you can always do so further down the line should your views or situation change. It is worth pointing out here that some landlords will insist on tenants having liability cover when you sign the rental agreement (particularly for furnished properties). As it is not a legal requirement, tenants are well within their rights to refuse, however it will mean they have to find another suitable property.
Tenant Insurance For Shared Properties
If you live in rented accommodation with other people, you are only responsible for arranging tenant insurance for yourself. Many tenant insurance providers will offer the option of covering you and your room only.
However, there will be some who won't offer you cover. This is particularly true if the accommodation does not have locks on the bedroom doors. In most cases, the policy will cover you for damage and theft of items in your room only. This means you will not have cover if you leave your belongings in other rooms of the house. Because of the perceived risks of sharing a home with other people, you can unfortunately also face higher premiums.
If you choose to only take out tenant liability insurance and live in shared accommodation, then you must declare that there are other residents at the property. In this instance, if all of your housemates would like liability insurance, you may find it easier to take out a policy together with each tenant named on the agreement.
Tenant insurance offers optional protection for any accidental damage caused to your landlords belongings. It also covers damage or theft of your own possessions. It's not unusual to choose not to have tenant insurance (in fact, only 53% of renters in the UK have contents insurance). However, for many renters it offers extra peace of mind and financial security that is well worth the comparatively small investment.
If you are unsure if tenant insurance is right for you, we would be happy to help. At Oasis Living, we work with tenants on a day-to-day basis. This means we can give you expert insight into what, if any, kind of policy will best suit your situation. Head over to our contact page or give us a call. We'll get back to you as soon as we can. We also have more information about contents insurance on our blog.
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