What is Renters Insurance and Who Needs It?
If you are renting your home, insurance for your belongings won’t be covered by your landlord's home insurance. Here’s what contents insurance for renters covers and why it could be worth considering.
When you’re renting your home, repairs, improvements and replacing fixtures and fittings can usually be left to the landlord.
But when it comes to your possessions – including any furniture that’s yours – the responsibility for insuring them lies firmly with you, the tenant. That’s why it is worth considering renters insurance.
What is renters insurance?
Also known as tenant insurance, renters insurance is contents insurance that helps cover the cost of repairing or replacing your belongings if they are stolen or damaged.
While landlords are responsible for the building, permanent fixtures and fittings, as well as the various appliances they have provided, such as fridges and washing machines, they are not responsible if anything happens to your belongings.
This means they don’t have to replace anything of yours if a fire, flood or burglary happens in your home.
Do you need renters insurance?
Having contents insurance as a renter is not a legal requirement, but most people would struggle to afford to replace everything they own if they needed to. So whether you are renting a single room, a flat or a whole building, you may want renters insurance to make sure that you’re protected.
Some landlords will already have a contents insurance policy in place as part of their landlord home insurance for anything that belongs to them. But this will only cover items in the property that they own, not your belongings. And if the property you rent is unfurnished, the landlord may not have any contents insurance at all.
If your landlord has accidental damage cover, you may be covered if you unintentionally damage their property. But if they don’t have this, they may ask you to pay for the cost of any repairs yourself, or they may deduct it from your deposit.
To help with this sort of issue, you could consider taking out combined tenants’ liability and contents insurance. Tenants’ liability cover is designed to cover you if you accidentally damage your landlord’s fixtures and fittings.
How renters insurance works
While the landlord is responsible for the building and permanent fixtures and fittings, renters insurance covers the tenant’s possessions.
This cover includes if you lose your belongings or if they are damaged after vandalism, theft, explosion, fires, storms, escape of water and building subsidence.
You can usually choose the level of voluntary excess you pay if you make a successful claim. The excess is how much is deducted from the insurance payout. The higher the excess, the lower your premiums usually are – but make sure that the reduced payout would be affordable for you. And also consider that the insurer may charge a compulsory excess as well.
If you have new for old cover, which most policies offer, the insurer pays for a new, equivalent replacement or repairs it as new. They won’t take wear and tear or how it might have reduced in value over time into account, with the exception of some less durable items such as towels or clothes. When you add up the value of your belongings to work out how much cover you need, calculate the like-for-like replacement cost.
What renters insurance covers
Contents insurance for renters will usually cover loss or damage to your possessions, such as electrical goods, any furniture that’s yours, clothes and jewellery.
Most policies will also allow you to claim for replacement locks and lost or stolen keys, as well as items you may not have considered, such as bedding and crockery.
Some will also include tenants liability cover, which pays towards fixing accidental damage to your landlord’s fixtures and fittings or belongings. Some landlords ask their tenants to have this type of cover as part of the tenancy agreement.
What renters insurance doesn’t cover
As with all types of insurance, these policies tend to come with a few exclusions so always read the small print.
Standard renters insurance won’t usually include:
- damage to items caused by wear and tear
- damage to items caused by pets
- possessions worth more than the single-item value limit, typically up to £1,500, if the item wasn't listed separately
- unforced entry, where possessions are stolen in a burglary but there is no sign of a break-in
- items you use for business purposes
- damage or lost belongings while you’re away from the property
Renters contents insurance extras
Some of the exclusions from most renters insurance policies are available as optional extras. One of the most commonly added is personal possessions cover, which protects against loss or damage when items such as smartphones and laptops are taken outside the home.
You can also list items worth more than the single-item limit, such as jewellery, separately. This may cost extra, but it is important to tell your insurer to include these in your cover.
If your policy doesn’t include accidental damage cover, you may consider adding that too. That way, if you drop your laptop, for example, it should be covered.
Do you need student contents insurance?
With student rooms and flats likely to contain high-value items, including laptops and smartphones, some form of contents insurance is worth considering to protect from theft, loss and damage up to a maximum value.
One option for students is to be added under their parents’ existing home insurance cover, if their policy allows it. If you’re in halls of residence, check if the accommodation already has some level of contents insurance. If you’re not taking out the policy yourself, always check what is and isn’t covered.
Otherwise, renters insurance can be useful, and many insurers offer student contents policies. Bear in mind that if you want cover for taking your valuables outside your accommodation, you’ll need to add personal possessions cover to your policy. High-value items may need to be listed separately to be covered.
Be sure to lock your doors if you’re in shared accommodation, as your belongings will only be covered for forced entry, unless the policy has walk-in theft cover.
How much renters cover do you need?
The easiest approach to working out how much contents cover you need is to take an inventory of your possessions and make a note of their value.
You can provide an estimated value of all your possessions. Anything that’s worth around the single-item limit, which is typically £1,500, will need to be specified. If you buy something expensive after taking out a policy, tell your insurer or it may not be covered.
It is important to be as accurate as possible, and try to keep receipts of any expensive items you want covered. If your estimate is too low, the payout you get from a successful claim may not give you enough to replace the lost or damaged items. On the other hand, If it is too high, you will be paying more for your insurance than you need to.
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Jeff is a freelance journalist who writes across finance & business. He was the personal finance editor at The Scotsman & Scotland on Sunday & a member of the Financial Services Consumer Panel. Read more
Holly champions clear, jargon-free writing. She’s been creating finance content for leading organisations for over 10 years. Read more