Underinsuring your home might be one of the biggest and costliest mistakes someone could make. Here's how to help avoid underinsuring your home and contents.
Home Insurance
What is renters insurance and what can it help cover?
When accidents occur, having renters insurance can help alleviate the financial pressures of having to replace your possessions - or find somewhere else to live.
When you're renting, it's your belongings that turn a house or apartment into a home. Whether it's a favourite artwork, a family heirloom or a much-loved armchair - your possessions reflect what's important to you.
Although it can be hard to put a price on the sentimental value of your belongings, having adequate insurance coverage can help ease the financial burden should the unexpected occur.
"The unexpected, like fire and storm damage^, can happen. And when it does happen to renters, they may discover that they're not covered by the landlord," explains Bill Bloodworth, General Manager Home Insurance at RACV.
"With singles and couples living in rental properties longer, they may find themselves owning more contents, and contents of greater value, as their lifestyles change and their families grow. This may leave them open to greater financial loss without adequate insurance coverage."
It's prudent for all housemates to consider contents insurance to help protect their belongings.
Renting issues in a disaster, such as a storm, flood or bushfire
If a rental property is destroyed or damaged in a natural disaster, such as a storm, flood or bushfire, and is no longer safe or fit to live in, either the renter or the rental provider (landlord) can issue a notice to end the rental agreement immediately, according to Consumer Affairs Victoria.
What may surprise renters is that the rental provider is not required to provide alternative accommodation after a disaster. If the property is damaged but remains safe to live in, a renter still has to pay rent. However, they can try to negotiate a rent reduction with the rental provider or seek compensation later, according to Tenants Victoria.
If the property is still intact, but the renter no longer wishes to live there, they must negotiate with the rental provider to end the rental agreement.
Insurance aimed at helping suit the needs of renters
RACV Renters Insurance can help ease renter's concerns by providing the reasonable extra rent costs for temporary accommodation if a rental property is unliveable following an insured event.1
"Trying to find temporary accommodation after an insured event can be particularly difficult for renters who have young families or pets," says Bloodworth.
In regard to personal possesions, a renter is responsible for their own contents insurance. In the event of a natural disaster, they will bear the cost of damage to their possessions. The only exception is when the renter can demonstate that a rental provider was negligent, according to Consumer Affairs Victoria.
Splitting the cost of renters insurance among tenants
While many renters choose to live solo, share house living has become more commonplace in recent years, with young professionals staying in shared rental accommodation well into their careers
"Unexpected events such as fire or flooding can often impact the contents of an entire share house, so it's prudent to ensure that all housemates are covered," says Bloodworth.
"Those living in shared rental accommodation can choose to take out a RACV Renters Insurance policy which protects the contents of all residents, when all residents are listed on the policy, and then split the cost just like any other bill."
Having renter's insurance can help protect your personal belongings, including clothes, jewellery, luggage, computers, furniture, and electronics, against losses, damage or destruction.
The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies. visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Product issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678
^Unless you have chosen to remove Flood, Rainwater run-off or Storm Surge cover where RACV Insurance has identified your home at risk of flooding. Other conditions apply, including that damage caused by actions of the sea is not covered.
1. If you have RACV Contents Insurance and a listed event causes loss or damage to the rental property where you permanently reside, you may be covered for any extra rent costs that RACV Insurance agrees are reasonable for temporary accommodation for you, your family, and your pets that you normally keep at your site. RACV Insurance may pay these costs for the reasonable time that it agrees it should take to repair or rebuild your rental property for up to 12 months from when the listed event took place. Read the Product Disclosure Statement for full details about your cover, any limits, exclusions and conditions that may apply.
