Renters insurance guide: to safeguard personal belongings

 There are two main types of home insurance: buildings and contents. As a tenant, the only insurance you need is contents insurance – also known as ‘renters’ insurance’. Your landlord is responsible for buildings insurance which covers the structure of a rental property. Renter insurance isn’t compulsory – but it is a good idea. For a relatively small amount of money, you can protect your belongings against a whole list of unfortunate events.

According to the Money Advice Service, the average renters home insurance policy costs just £57 a year. ‘The decision about whether or not to insure the contents of your rental property is usually up to you,' says Greg Wilson, founder of price comparison site Quotezone.co.uk.

'It is your own stuff, after all. However, some landlords might add a clause to their tenancy agreements requiring the renter to take out tenants’ insurance – so it could be a contractual obligation even though it won’t be a legal one.’

What is renters’ insurance?

Imagine you’re moving home. Everything that you own and would take with you is considered to be contents – things like your TV, clocks, clothes, gadgets, sports equipment, and so on. Everything which stays in its place is considered to be part of the building (like the bathroom or the kitchen sink). Contents or renters’ insurance protects your belongings against events out of your control such as theft or damage.

Tenants need this kind of cover because the insurance your landlord holds doesn’t cover your stuff – meaning you could be out of pocket if something happens to it.

A common worry among renters is their possessions being stolen in the event of a break-in. But burglary isn’t the only thing insurance will protect you from. There are plenty of other reasons too such as damage or destruction due to the weather, leaks, flooding, burst pipes, and fires. Hopefully none of these things will ever happen to your home – but you can’t be too careful.

Wilson adds: ‘Renters’ insurance is basically another name for tenants’ insurance, and is a type of insurance policy specifically designed to protect the contents of the rental property that belong to you.

‘In practice this means that a good policy should cover your furniture, rugs, books, clothes, gadgets and electrical equipment. Paying out if any of those items are damaged or destroyed by a fire or flood, or stolen during a burglary. Some policies will also cover valuables that you usually carry with you, such as your engagement ring, your watch, and so on.’

Why should I have renters’ insurance?

Think about the situation you would be in if all your possessions were destroyed in a fire or flood, or if your most valuable items were stolen. Could you afford to replace all your things? Most people would struggle to buy everything again – so this is where insurance can help.

Leanna Donkin, partner at House Partnership, says: ‘Tenants are advised to take out their own contents insurance for the possessions that they bring to the rental house. There is usually a clause (or two) within the tenancy agreement relating to the landlord’s insurance policy. The tenant should ensure that they are familiar with this so that they can adhere as required and not invalidate the landlord’s insurance.’

It would normally take a catastrophic event for you to lose everything you own, but being burgled, having your bag stolen in the pub, being mugged for your phone, or having your bike nicked are a lot more common. However, research from MoneySupermarket.com found that only two in five tenants (40%) have renters’ insurance, despite it being pretty cheap. Many tenants mistakenly think they are covered by their landlord’s insurance.

Kate Devine, insurance expert at MoneySupermarket, says: ‘When you consider the overall cost of the possessions we own – from furniture to tech and electronics – assuming you’re covered could be a very costly error. That’s why it’s so important to ensure that you have the right contents insurance in place. '

What does renters’ insurance cover?

Renters’ insurance policies vary as to what they actually cover. Before you buy a policy, it’s important to check both the risks and events you are protected against, and which of your possessions are covered. A comprehensive renters’ insurance policy will protect your belongings against:

• Damage or loss due to fire and smoke
• Theft and vandalism if someone breaks into your home
• Damage or destruction caused by storms and floods
• Household leaks such as water or oil from pipes or appliances in your home
• Tenants’ liability if you damage something belonging to your landlord

The kinds of possessions that will be covered on a renters’ insurance policy include:

• Furniture
• Gadgets (such as cameras, smartwatches, and smartphones)
• Electrical items (such as computers, tablets and TVs)
• Clothes
• Cash
• Musical instruments
• Sports equipment

Out of home cover - what you should know

The most basic renters’ insurance policies will only cover your possessions while they are in your home. If you want your stuff to be covered while you are out and about, you’ll need to make sure your policy includes ‘personal possessions’, ‘away from home’ or ‘out of home’ cover. This is included as standard on some policies, but you’ll need to pay extra for it on other policies.

This type of cover is really important because we often carry around our most expensive possessions such as mobile phones, laptops, and smartwatches. These items are fairly likely to be lost or stolen too – for example, how many people do you know who have lost their phones?

High value items cover

When you take out renters’ insurance, the insurer might ask you about ‘high value’ items and ask you to list these separately. These might be things like jewellery, mobile phones, laptops, art or bikes. Some home contents insurance policies give you an individual cover limit per high value item, such as £2,000. Other contents insurance policies offer a total cover limit for all your valuables, such as £20,000.

Bikes

If you’re a cyclist, you should check your bike is comprehensively covered both in your home and outside of it. You’ll normally need to list your bike as a high value item. Most policies stipulate that your bike must be locked to something securely fixed to the ground with a decent lock to be covered outside of your home.

Serious cyclists might be better off buying cycle insurance which covers more expensive bikes and includes personal liability cover – this covers you if you hit and injure someone else.

Accidental damage cover

Some renters’ insurance policies include accidental damage cover. Accidental damage is defined as ‘sudden and unexpected damage to your property or contents by an outside force’. This includes things like spilling a glass of wine and staining the carpet, or knocking over your TV. Accidental damage cover is sometimes included in renters’ insurance, but it’s more commonly sold as an optional extra. This policy add-on is particularly useful if you have kids that might break things or draw on the walls when you’re not looking.

Legal expenses cover

Another type of cover that can be added to your policy for a small fee is ‘legal expenses’. This will cover the cost of legal proceedings in a number of scenarios if you need to take action or defend a claim. Claims can relate to things that are nothing to do with your home such as personal injury disputes and employment tribunals.

Digital download cover

Another renters’ insurance add-on you can buy is digital download cover. This will pay to replace any digital content, such as music, films, books and games on lost or stolen phones, laptops or tablets.

What doesn’t renters' insurance cover?

All insurance policies come with ‘exclusions’. Exclusions are clauses in a policy which state what items, or events, are not included in the cover provided. Typical exclusions in a renters’ insurance policy might be:

•  Damage to camping gear or sporting equipment while it’s being used
• Belongings left on display in a car or other vehicle, even if it’s locked
• Possessions left unattended in a public place – for example, if you leave your phone in the pub
• Items bought to run a business other than clerical work (for example, a massage table)
• Damage caused by wear and tear
• Poor maintenance or botched DIY
• Negligence – for, example, you won’t be covered if you leave your home unlocked
• Theft by someone you invited into your home such as a lodger or party guest
• Anything that happens if you leave your home unattended and unchecked for 30 consecutive days or more

How to buy renters' insurance

Consider the following points:

How much cover do you need?

When you buy renters’ insurance, you need to make sure you have sufficient cover to the value of everything you own. To work this out, go from room to room in your home and write down how much everything is worth. The total value of your contents is called the ‘sum insured’.
Some insurers no longer ask you to specify sums insured as they provide automatic cover up to a set limit, normally £50,000. Others use a ‘bedroom rated’ system whereby the insurer works out the amount of contents cover needed based on the number of bedrooms you have.

What type of cover do you need?

If you live in a shared house, or student accommodation, you can buy renters insurance to just cover the contents of your room. Some insurers also offer ‘common areas’ cover to protect things you leave in space shared with other people such as the living room. If you live alone, or as part of a household such as a couple or family, you can buy one policy to cover everyone’s possessions.

Think about your excess

The ‘excess’ on an insurance policy is the amount the policyholder has to pay in the event of a claim before the insurance pays out. On a renters’ insurance policy, there will normally be a compulsory excess but you can add a voluntary amount too. The higher the total (compulsory + voluntary) excess, the lower your premium will be.

Shop around for cover

Make sure you compare different renters’ insurance policies and premiums before making a decision. Don’t just buy the cheapest policy – make sure the policy is right for you. Price comparison sites such as Gocompare.com, CompareTheMarket.com and MoneySupermarket.com make shopping around and comparing policies quick and easy. When you’ve chosen a policy, you can normally click through to the insurer’s site and buy it.

Pay annually rather than monthly

Renters insurance premiums are quoted as an annual price – but you will also be given the option of paying monthly.
This will work out more expensive as insurers effectively give you a loan for the premium amount and add interest on top. So, it’s cheaper to pay for your annual cover upfront.

Don’t let your policy ‘auto-renew’

Many insurers will ask you to agree for your policy to auto-renew. This means that after a year the company will generate a new price for you and, if you don’t take action, automatically charge your debit or credit card and then cover you for another year. This might sound great – but it’s not. Insurers hike their prices each year so auto-renewal normally results in paying more for insurance than you need to. Instead, head back to the price comparison sites to search for a cheaper policy.
'Shopping around online and switching provider regularly is one of the best ways to ensure you are not paying over the odds' advises Ursula Gibbs, director at CompareTheMarket.com. 'Potentially saving hundreds of pounds each year. Don’t get complacent over your renewal price; check to see whether you can get a better deal elsewhere.'