Renters Insurance - Why do you need it?

Insurance is important for both landlords and tenants. Landlords should insure their rental property against any damage and tenants should also have insurance for their belongings, and to protect them from liability.

Harcourts recommends that tenants get their own insurance. Your landlord’s property insurance does not cover your belongings, even if your belongings are ruined by the landlords appliance, such as a hot water cylinder bursting. You could also be liable for damages caused by you or your guests depending on the circumstances.

Even if you are not on the tenancy agreement you should consider getting:

• Contents insurance to cover your belongings
• Personal liability insurance to protect you in certain situations.

However, if tenants or their guests carelessly damage a rental property, they are liable for the cost of the damage up to four weeks’ rent or the landlord’s insurance excess (if applicable), whichever is lower.

So, if you do accidentally cause damage to the property, let your property manager know so that they can seek advice from the landlord’s insurer. Intentional damage however is treated differently from careless damage and may not be covered by the landlord’s insurance. An example: a tenant had dogs in a rental property, but then allowed the dogs inside even after more than a couple of “accidents.” The tenant should have known that damage was going to result from allowing the dogs inside, and this damage was therefore deemed to be intentional.

Intentional damage is damage caused by actions which are deliberate and not careless. The Tenancy Tribunal has previously found damage to be intentional if the tenant meant to cause it or knew that it was certain to result from their actions. Speak to an insurer for more about personal liability cover in a rental home.