If you’re renting where you live, this type of insurance mainly provides cover in case your stuff is stolen, lost, or accidentally damaged or destroyed. Your landlord’s insurance won’t cover the things you own.
Sometimes renter’s insurance can also help pay for damage you accidentally cause to your landlord’s property. However, this has become less important since a law change in 2019 put limits on how much you have to pay your landlord or their insurer for accidental damage.
Every renter’s insurance policy is different and the premiums you pay can vary quite a bit. This guide is designed to help you decide whether renter’s insurance is for you, and if so, how to get the best deal for your needs.
Do you need renter’s insurance?
If you don’t have much of any value, then you probably don’t need renter’s insurance. But before you heave a sigh of relief and move on, it pays to make sure.
Make a list of everything you own and use the web to find out what each item would cost to replace with a new equivalent. Now add it up and decide whether you could afford to replace everything if a burglary, fire, explosion, earthquake, tornado or flood cleaned you out.
If you take the time to include all your possessions, you might be surprised by how much money you’d have to spend to get your life back to where it was. Here are some suggestions to help you get started:
- Clothes, hats, shoes, bags, suitcases
- Watch, jewellery, phone, laptop, monitor, text books, work tools
- Bed, bedding, desk, office chair, bedside lamp, lounge furniture, floor rugs, artwork
- TV, gaming console, DVD player
- Kitchenware and appliances, dinner set, glassware, cutlery, fridge, washing machine, drier, dehumidifier, vacuum cleaner, clothes drying rack
- Garden tools, lawn mower, hose, outdoor furniture, BBQ, bicycle, helmet, pump, beach umbrella, tent, camping gear
- Sports gear, including non-powered water toys like surfboards and kayaks
- Cost to replace your wallet or purse, driver licence, passport, public transport card etc
What if you damage the landlord’s property?
Possible damage to the property you’re renting includes everything from minor accidental damage right up to a major house fire caused by knocking over a candle.
Fortunately, a new law introduced in 2019 limits the amount tenants have to pay if they (or one of their guests) accidentally causes damage to a rental property. In summary, it means you only have to pay for whichever one of these three things is the lesser amount:
- The landlord’s insurance excess (the amount they agreed to pay towards any insurance claim they make)
- Four weeks’ rent
- The cost of the damage
So, if your rent is $700 a week ($2,800 for four weeks) and the landlord’s insurance excess is $1,000, the maximum you’d ever have to pay is $1,000. If the damage costs less than that to repair, you’d just pay for the actual cost.
The only way a landlord or their insurance company can chase you for more is if the damage was intentional, or caused by doing something that’s illegal and carries a prison sentence.
Landlords have to include insurance information in any new tenancy agreement. If your agreement doesn’t have it, ask your letting agent or landlord to provide it in writing. Work out the maximum amount you’d ever be liable for. If you’d be happy to pay that, then you probably don’t need a higher premium to include landlord property cover in your renter’s insurance policy.
If the landlord’s insurance policy changes, they have to let you know within a reasonable time.
What does renter’s insurance cost?
This is a bit like asking how much a car or washing machine costs. It depends on quite a few things and everyone’s situation is different. But to give you a rough idea, let’s say $10,000 worth of cover might cost around $400 a year.
The best way to get a more accurate idea is to ask a few insurers for a quote. It usually doesn’t take long and can often be done online. Here are some of the things they’ll probably ask about. They affect the insurer’s risk and the premium they’ll charge.
- ‘New for old’ or ‘current market value’. Most insurance policies will repair or replace your damaged or stolen items, or pay you what it would cost to do so. When it comes to replacement, most insurers will replace with the new equivalent. This is called ‘new for old’ or ‘total replacement’ cover. But some will only replace like for like. This is known as ‘current market value’ or ‘indemnity’ cover. For example, market value cover would mean replacing a three-year-old laptop with the same model of the same age, or paying you what they currently sell for second-hand. New for old (total replacement) policies always cost more than current market value (indemnity) ones
- Total sum insured and named items. As you’d expect, the total value of your possessions will affect the cost of cover. In addition, most insurance policies include a maximum $ limit for any one item. If you have more valuable items, you can request separate cover for them as named items. This can usually be done as part of the same policy. However, if your insurer won’t cover something valuable, like your mobile phone, you may need a separate policy to cover it.
- Alarm system. Having an alarm in your rented property will reduce your premium, particularly if it’s a monitored alarm. If the property doesn’t have an alarm, ask the insurer what difference it would make to your premium if you had one. It might be worth buying a portable system that you can take with you when you move house.
- Flatmates. If you’re sharing a house with others, the more flatmates you have the higher your premium could be. That’s partly because there’s more chance of someone not locking up properly or damaging your stuff.
- Your details and insurance history. Sometimes the younger you are, the higher your premium will be. But this varies between insurers, so be prepared to shop around. If you’ve already had contents or renter’s insurance, made very few claims and paid your premiums on time, you’ll probably pay less than a first-timer.
- The location. Most insurers take your address into account when calculating your premium. If your rental property is in an earthquake or flood-prone area, some insurers may not want to cover your belongings at all, while others may simply charge more. Areas with more burglaries can also attract higher premiums. Apartments with swipe card access can come with lower renter’s insurance premiums than standalone houses.
- The excess you’d like. This refers to the amount you must contribute to any claim. The higher your chosen excess, the lower your premium will be. But resist the temptation to make it so high there’s no point claiming.
- Premium payment frequency. Insurers generally offer a lower premium overall if you pay a year in advance, rather than monthly. In both cases, if you cancel your policy the insurer will repay the portion of your premium that’s still in advance.
- Having other policies with the same insurer. You can often get a ‘multi-policy discount’ for having other types of insurance with the same insurer. Examples could include vehicle, health, life, trauma, income protection, business or professional liability insurance.
What does renter’s insurance not cover
Most insurance policies will list things that are not covered. These are known as exclusions. These vary between insurers, but here are the common examples to look for:
- Gradual damage caused by use. This is known as ‘wear and tear’.
- Deliberate damage or theft by anyone who lives at your home.
- If a burglar didn’t force their way in. For example, because a window was left open or a door wasn’t locked.
- Items that are not named in your policy and exceed a single-item value limit.
- Items stored away from your home or items you take with you while away from home.
- Business-related or owned items, such as stock you sell through a side-gig online store.
Again, not all of these exclusions will apply to every policy, so check when comparing policies and premiums.
How to find the best renter’s insurance in New Zealand
The best renter’s contents insurance will depend on what’s most important to you. It could be the cheapest; the one that offers the broadest level of cover (for pretty much anything); or it might be the one with the best customer service record when it comes to making a claim.
It’s important to think about your priorities.
- Are you prepared to have some things not covered in order to get a cheaper premium, or is complete peace of mind more important to you?
- Are you OK with contacting your insurer whenever you buy something that exceeds the individual item cover limits? Or would you prefer to pay for higher limits in the first place?
- Would you have the time to answer heaps of questions and provide supporting evidence when making a claim?
- Would you put more value on an insurer that’s known for making it super-easy to claim, so you can get your life back on track more quickly?
Professional advice for renter’s insurance
As with any type of insurance, it pays to get qualified independent advice and shop around. Talking with a good insurance adviser (aka broker) could save you a lot of time and money. If they represent most of the main insurers, they’ll have a good idea of what’s available. After talking with you to understand your needs and priorities, they’ll recommend and explain a few options for you to choose from.
Advisers are usually paid by the insurer you decide to go with, so there’s typically no charge to you for their advice. Remember to ask upfront if there are any fees you might have to pay them and get the answer in writing. They should provide this anyway.
When your insurance needs change, you can simply give your adviser a call and ask them to recommend the best solutions. An annual review with your adviser can also be a good idea.
How to get the most out of your renter’s insurance policy
Once you’ve sorted your insurance, here are a few tips to help you get the best out of it:
- Make a list of all your possessions, record their value and ensure everything you would want to claim on is covered by your policy.
- Record serial numbers and photograph everything (including receipts), so it’s really easy to claim when disaster strikes or to file a police report after a burglary.
- Keep your records up-to-date and store them off-site or in the cloud.
- Check your insurance cover annually, talk to friends and family about their insurance experiences, and be prepared to shop around or switch.
- If you take out other types of insurance, ask about multi-policy discounts and take them into account when choosing the best insurer for you.
- If you move house or your circumstances change, especially the detailss you mentioned when taking out your policy, be sure to let your insurer know.