clovaRenting
Contents Insurance for Renters: What It Covers and Whether You Need It
When you rent, your landlord's insurance covers the building but not your belongings. Contents insurance covers your things if they're stolen or damaged by events such as fire or a storm, and usually your legal liability if you damage someone else's property. Whether you need it depends on what replacing your things would cost you.
By MarnixPublished Sources
You've signed the lease, carried the boxes up the stairs and set up your room. The building has insurance, so you'd think a break-in or a burst pipe is covered. For the walls, it probably is. For your laptop, bed and clothes, it usually isn't.
That gap is what contents insurance fills. Start with what replacing your belongings would cost.
What contents insurance protects
Contents insurance is cover for those belongings: things that aren't fixed to the building, from furniture to clothes. It usually includes legal liability cover too, which pays if you're found responsible for damage to someone else's property or an injury to another person.
Examples from Moneysmart. Check how your own policy defines contents.
If you're still setting up your first place, our guide to moving out of home covers the other costs that come with the lease.
What a contents policy covers
A policy pays out for insured events, the things it lists as covered. These usually include theft, fire, storms and malicious damage. Flood is sometimes covered and sometimes excluded, so it's worth checking if you live near a river or a low-lying area.
A few things often need checking or adding:
- Accidental damage. Most policies don't cover a spilt drink on the couch or a dropped television unless you add it.
- Portable cover. Things you carry, such as a phone, laptop or bike, are often only covered away from home if you add portable contents cover, usually with a limit for each item.
- Limits for each item. A policy might pay at most $1,000 for an electrical item, for example, even if yours cost more.
- Exclusions. Theft can be excluded if a door or window was left unlocked.
Work out what your things would cost to replace
The amount you're covered for is called the sum insured. A good place to start is to list what you own using current replacement prices.
Hana is made up. She rents a room in a share house in Brisbane, and her room holds most of what she owns.
Each block is to scale. Made-up prices for new items.
Most policies pay the replacement value, sometimes called new for old: the cost of buying the item new. Some pay only what the item was worth at the time, which drops as it ages. Replacement value costs more but leaves less of the bill with you.
While you're listing things, a short video of each room on your phone, plus receipts and serial numbers for the expensive items, makes a claim easier to prove later. The Insurance Council of Australia has a contents calculator, linked from Moneysmart's contents insurance guide, if you want a second estimate.
Compare policies on more than the premium
The premium is what you pay for the policy, and the excess is what you pay towards each claim. Choosing a higher excess usually lowers the premium, but you'd need that amount ready if something happened. Our guide to car insurance under 25 shows how a cheaper premium with a bigger excess can cost more in a year with a claim; the same sum works for contents.
Ask for the insurer's Key Fact Sheet, a standard summary for comparing policies. The product disclosure statement, or PDS, has the full detail. If you share a house, check whether the policy covers a room in a share house, and whose belongings it includes.
Paying the premium once a year can be cheaper than paying monthly, but it means finding the whole amount at once. Our yearly bill converter turns a yearly premium into an amount to put aside from each pay.
Clova is a budgeting app that includes bills like this in each pay's plan.
What would be hardest to replace from your own savings gives you a place to start when choosing cover.
A note from us
Insurance is a bill for something you hope never happens, which makes it easy to put off. We are building Clova so bills like that have a place in every pay.