What’s renters insurance and do you really need it?

Nearly 30 per cent of Australian households don’t have renters insurance, with many seeing it as a ‘nice to have’ rather than a must-have. 

One of the perks of being a renter is that it’s your rental provider’s responsibility to insure the building and make repairs when necessary. What happens though if your personal belongings get stolen when your house is broken into or damaged in a storm or fire?

Unfortunately, your rental provider is under no obligation to replace them or reimburse you.

This is where renters insurance can be the saving grace, but what is it and is it really essential?

What exactly is renters insurance?

Renters insurance, commonly known as contents insurance, protects a renter’s belongings, liabilities and living expenses. It’s designed to help cover the cost of loss, theft or damage incurred from a storm, flood, fire, or burglary.

In addition, some insurance policies also provide coverage for an accident at a residence such as bodily injuries. A policy can also cover temporary accommodation for a renter, their family and pets if their home is unliveable after an insured event.

It’s usually available to a renter renting or subletting a single family home, apartment, duplex, condo, studio, loft or townhouse. The insurance policy only protects against losses incurred in the renter’s rented property.

In general, renters insurance offers three types of financial protection:

1. Personal property coverage

2. Liability protection

3. Additional Living Expenses (ALE) protection

Some insurance policies will provide a replacement cost for a lost or damaged item. Oher policies may only provide cash value, which takes into account the depreciation of your item before the payout.

What does it cover?

Renters insurance can cover all your personal belongings from family heirlooms, to furniture, household goods, clothes, electronics, artworks, bicycles and mobility scooters. It can also cover landlord fixtures and fittings that you are liable for under the terms of a rental agreement, and fixtures and fittings that you have installed for your own use during your tenancy.

While there are plenty of items covered by renters insurance, it’s important to remember that not everything you own will be.

This can include unset precious and semi-precious stones, plants and trees growing outdoors, animals and pets, bicycles while they are in use for competitive racing or pace-making, photography or video equipment while being used for work purposes, musical instruments used for work purposes, sporting equipment while in use, and motorcycles requiring registration.

Depending on where you use your belongings, you might want to also consider bundling your renters insurance with portables insurance. That way you cover expensive items if they are stolen or damaged outside your home.

Items that are normally covered by portables insurance include expensive sneakers, handbags, laptops, musical instruments, tools, sporting equipment, glasses, jewellery and clothing. When taking out portables insurance, it’s important to specify these items individually when you request your quote.

To ensure you understand your cover limits, make sure you read the details when you receive your policy documentation.

Do you really need renters insurance?

While it’s not compulsory, many believe that renters insurance is an essential expense to protect your back when something goes wrong.

According to data from the ABS however, nearly 30 per cent of Australian households don’t have renters insurance. They claim they can’t afford it or only see it as a “nice to have” rather than a “must have”.

The cost of insurance varies among providers and is dependent on what belongings you deem eligible to get insured. Data-driven insurance platforms such as Kanopi (who recently partnered with Sorted Services to provide our 81,000 renters a specified renters contents insurance policy), use the information you provide to generate quotes from their insurance partners, essentially doing the hard work for you.

Remember, it’s important to read the insurance provider’s documentation that comes with your quote. It might seem boring, but it’s where you can compare the value of your items with the costs to insure them and the policy excess. This will help you figure out if there is value in getting insured.