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Do renters need home and contents insurance?

In comparison to buying a house and servicing a mortgage, renting can be more economical and continues to be a popular option in Australia.

Unfortunately, in a lot of cases renters aren’t insuring themselves correctly and find themselves in a situation where they’re left out of pocket if something goes wrong. Today, we’ll be looking at how home and contents insurance applies to renters.

Why do renters need contents insurance?

Many renters assume that due to the property not belonging to them, home and contents insurance doesn’t apply and it’s up to the owner to look after the cover. Although it’s correct that the owner of the house will need to have their own home insurance, their policy won’t cover your possessions. For example, if something happens to the house itself, such as roof damage, the owner’s policy should cover it. However, if your possessions are damaged or stolen, you’re on your own.

Although you won’t need to worry about home insurance, as a renter you must ensure you have contents insurance in place in the event that your possessions are lost, damaged or stolen. Always check type of cover the home owner has in place.

What level of cover do I need?

It’s up to you what level of cover you choose to take on for your contents insurance. A basic policy will generally cover events such as fire, flood or theft, and have a lower limit that you can claim up to.

If you choose a higher level of cover, you’ll be protected for a wider range of events and can also be insured against accidental loss or damage. Make sure you look for a policy which has new for old replacement for your contents too. Some policies will also provide cover if something happens to your items while you’re away from home.

Remember, it’s easy to underestimate how much your possessions are worth, so it’s a good idea to go room to room and estimate how much it would cost to replace each item. You’ll be surprised at how quickly the total adds up. Online tools, such as CGU's Home Contents Calculator can be useful in giving you an idea of your replacement cost estimates1.

Also remember to consider more expensive items such as electronics and jewellery and speak to your insurer about including them on your policy. Review your contents insurance each year and add on any items or increase your policy if necessary. Also, hold on to any receipts for more expensive items as proof of purchase as this will make things easier at claim time.

What won’t be covered?

As explained above, you need to decide on the level of cover that’s best for you. The more basic cover will cost you less up front, but only provides limited cover for defined events, whilst premium policies offer more protection at an increased price.

One of the most important things to remember if you’re renting with other people is that your policy only covers your possessions. Your housemates will need to take out their own policies to cover their possessions.

For more information about home and contents insurance, contact CGU today.

Things you should know

1 Building and contents calculators are provided by CoreLogic and should only be used as a guide. These calculators' estimates may be different than estimates you get during your quote. We do not guarantee the accuracy or currency of the estimates.