What is tenant’s home insurance?
As house prices continue to soar and be put beyond the reach of many UK citizens, mortgage lenders are also being more selective as to who they agree to plans with as they restrict their lending criteria still further. All this means that increasing numbers of people are turning to the buoyant rental market as an alternative means of putting a roof over their head – if not for the long term then at least for the foreseeable future.
Tenant’s home insurance is essentially another name for traditional home contents insurance, yet specifically aimed at the rental market. It offers pretty much the very same functionality and usability as contents insurance if you’re a homeowner, as opposed to a renter.
OK, you might not own the bricks and mortar but the chances are that most of the possessions found within the house are yours, which you’ve paid for and wish to protect in the event that they are stolen or damaged beyond repair.
“Never assume that, just because you rent a property, the landlords own insurance policies will cover your personal possessions.”
Yes, on some occasions landlords provide a percentage of the internal furniture too (should the tenant want it), however nine times out of ten the tenant brings their own sofa, armchairs, bed and coffee table, and most definitely provide their own TV, gadgetry and ornaments.
As we hinted above, a tenant’s home insurance policy differs from a conventional home contents insurance policy in name only, on account of it being more or less the same insurance product. Effectively a typical tenant’s home insurance policy will cover the policyholder for any damage or loss to their belongings and personal property within the building. The building of course falls under the insurance remit of the aptly named, ‘buildings insurance’, and is wholly the responsibility of the landlord/homeowner.
By and large rental properties are advertised as either ‘furnished’ or ‘unfurnished’ (although now and again there are ‘part furnished’ properties to look out for), the difference in this case being that the former means the furnished items are the property of the landlord (and therein, they’re responsibility to insure against the risk of damage/theft/etc…), while the latter ‘unfurnished’ means that you – the tenant – will require your own furniture, and therefore your own insurance policy if you wish to cover it.
Tenant’s home insurance policies are widely available for rented properties of all shapes and sizes, including self-contained and shared flats and houses. Tenant’s themselves come in a multitude of guises themselves, and routinely include students, single people and couples who may have recently moved to the area and have decided to rent while putting down roots, people who might have become recently separated or divorced and looking to start afresh, job re-locating people and/or local housing allowance tenants to name but a few acknowledged demographics. For any of these social groups arranging their own individual tenant’s home insurance policy is a must so as to secure their possessions while they’re living under a rented roof of some description.
Returning to the subject of students and/or potential ‘shared properties’, and it’s worth noting that by living with others under the same roof (only as separate entities) insurance might become a little more complex from the outset. Nothing which can’t be worked around, obviously, but policy agreements in this case are understandably not as clear-cut as they would be if it was one person living in the one dwelling.
For example, some insurers might stipulate that individual tenants have their own door locks fitted to secure their rooms within the shared property before they grant tenant’s home insurance cover, and could figure in additional exclusions before underwriting any policies. Always refer to the small print of your policy to make sure you are aware of all exclusions and stipulations.
Do I need tenant’s home insurance?
Yes, yes and yes. If you’re serious about protecting your personal belongings, effects and possessions against the risks posed by fires, floods and thefts (and who wouldn’t be?!), then it’s imperative that tenant’s arrange suitable and targeted home contents insurance from day one. And well in advance of their moving in date. And don’t be fooled if the landlord has bequeathed you most of the furniture and confirms that they have their own contents insurance cover in place as this WON’T cover your personal belongings should something go wrong. And just think for a minute about the value of the belongings most of us possess and transport from new home to new home. Everything from electrical appliances, gadgets and computer equipment through to bikes, jewellery and clothing is the norm.
Under most tenant’s home insurance policy circumstances the document holder will have their possessions covered against fire, theft, flooding, escape of water and storm damage, while further options such as home emergency cover, legal expenses cover, accidental damage cover and personal possessions cover are all strongly recommended as top-ups to ensure for every conceivable type of eventuality in the long term. Even if you only plan to rent for the short term.
The biggest decision a tenant must make is regarding the type of contents insurance policy they’re after. Split into two camps, tenant’s home insurance providers historically give the policyholder a straight choice between ‘new for old’ and ‘wear and tear’ plans, and both have very different bearings on how they view your replacement items and most keenly, how much the damaged, destroyed or stolen goods were valued at in the first place.
To keep matters relatively simple, ‘new for old’ policies will generally replace your items with the equivalent brand new ones, whereas ‘wear and tear’ plans instead choose to deduct a percentage of the item’s cost as a nod to depreciation and it’s worth on the current market.
Like any other mainstream insurance product, excesses also play their part in relation to tenant’s home insurance policies – the excess being the pre-agreed contribution the policyholder pays-out in the event of any future claim being accepted – with compulsory and voluntary excesses being the usual suspects again.
How much does tenant’s home insurance cost?
It’s vitally important that tenant’s looking to rubber stamp a home contents insurance policy run down those premium prices – admittedly as it is for everyone else securing insurance products out there – as perhaps you’re operating within a tighter budget than homeowners.
At the end of the day tenant’s home insurance premium prices by and large reflect how much you value your personal possessions and the price you would put on them to replace. Sentimentality being removed from the practical equation, suffice to say.
Although sounding like hard work, by doing your initial maths homework you’ll potentially save yourself; if not huge amounts of money on your annual/monthly premiums, then by not having to foot any shortfall in subsequent pay-outs from your insurer in the event of a claim being settled and both parties disagreeing on pre-emergency values. You see honesty is the key word here and as we all know, honesty pays.
Also make sure you note separately any more expensive individual items (like TVs, mobile phones, cameras and jewellery for example) as these can be insured in their own right up to the limited value of £1,500 on average.
Growing numbers of tenant’s home insurance providers are urging policyholders to have some form of additional cover in place so as to protect your landlord’s contents against any accidental damage on your part. What if you spilt red wine or paint on a fitted carpet in the property for instance, and had to not only foot the bill but also compromise your deposit being returned in full at the end of your contractual term? By including accidental damage clauses and conditions within your policy then the insurer would stump up as a result of such an accident occurring.
What can I do to reduce the cost of tenant’s home insurance?
Insurers tend to reward policyholders that keep their possessions safe and secure with lower premiums, so make sure you have good door and window locks fitted throughout the house. Your landlord should do this as a matter of course, but if not make sure you request it as soon as possible.
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