Worth the risk? A quick look at tenants’ insurance

Tenants are often confused about insurance – whether they need it and whether it’s worth the cost. In this post, we’ll give a few pointers that will help to clarify the picture.

Unlike motor insurance, which is a legal requirement before you drive on the public highway, property insurance isn’t mandatory. Broadly speaking, when we are thinking about property, there are three main types of insurance.

  1. Insurance to cover the building itself
  2. Insurance to cover the contents of the building, including personal possessions and furnishings
  3. Insurance to cover liability for damage to the building or its contents.

As a tenant, you cannot be forced to take out insurance. It’s up to you to decide to purchase cover or take the risk, but you only need to consider contents or liability cover. Responsibility for insuring the building itself lies with the landlord.

The term ‘contents’ refers to anything that isn’t part of the building’s structure and includes things like carpeting, curtains, white goods and furnishings as well as personal possessions. The important thing to note is that if something is owned by the landlord, it is the landlord’s responsibility to insure it – if he or she chooses to do so. If the items belong to the tenant, the landlord has no obligation to insure them.  That’s why there are specific insurance policies for tenants which exclude the unnecessary buildings cover and often focus on portable personal possessions.

The third type of cover, liability insurance, can also be useful for tenants. In essence, it protects the tenant who accidentally damages the landlord’s property. Say, for example, you spill red wine on the carpet and it stains. Without insurance cover, the cost of replacing the carpet could be withheld from your deposit when your tenancy ends. With tenants’ liability insurance, depending on the terms of the policy, you should be protected.

So, is it worth it?

While we don’t want to sit on the fence, we’re still going to say it depends on your personal circumstances and your view of risk. You may think you don’t own much worth insuring, but a collection of vinyl, electricals, a games console, a smartphone and a laptop soon add up. Perhaps you’ve got an item of jewellery, a painting, rare books or a rather expensive bicycle. Your landlord won’t insure these items for you. It’s also worth noting that should a pipe burst or the property flood because of extreme weather, if any of your property is damaged, your possessions won’t be covered by your landlord’s insurance.

What should you look for?

If you decide to take out contents insurance, look for policies which are specifically aimed at tenants. They are often tailored to suit, flexible and can have terms that match the length of tenancies.  These policies often have limits on the value of certain items, so check the detail and ask if you need extra protection. Some policies only offer cover for items while they are in the property, but others cover your possessions outside and in normal use. Look out for ‘New for Old’ cover, too, which ensures you can replace a stolen or damaged item with something that actually works. If you’re a student, look for a policy designed for your needs.

If you’re looking at liability insurance, it’s the same story. Look at the detail and check you understand what’s included or excluded. Again, no-one can force you to take out tenants’ liability insurance, but if there is damage to your landlord’s property your contents insurance won’t cover it.

Key points to remember

You cannot be forced to take out insurance.

As a tenant you do not have to worry about insuring the building you’re renting.

Your landlord has no responsibility to insure against theft or damage to your possessions.

Your possessions may be worth much more than you think.

Tenants insurance is often great value and very affordable.