Tenants need insurance too

There is a common misconception among tenants that because they do not own the homes they occupy, they don't need insurance for their possessions.

"Far too many tenants," says Dr Piet Botha, chairman of the Nationlink estate agency group, "seem to be under the impression that their belongings are covered under their landlord's insurance - only to find once their goods have been stolen or damaged that this is of course not the case.

"Tenants need what is called household insurance just as much as homeowners do."

He explains that this type of policy covers the contents of a home - the personal possessions of the individuals who live there - rather than the building itself.

"The actual 'bricks and mortar' are covered under another type of policy, called homeowner's cover (HoC). The landlord will usually have this kind of policy if he or she has a bond on the building, because banks generally insist on it. And it may cover any damage to a tenant's possessions that occurs directly as a result of any damage to the property - such as a burst geyser, say - which is probably where the confusion arises."

"HoC will not, however, cover the tenant's possessions against loss through theft, damage by another person, or natural events such as floods or high winds. For this, tenants need their own household insurance policies."

But before signing up for such a policy, Botha says, tenants should:

* Get at least three quotes from different insurance companies and make sure that their policies are really comparable. In other words, don't just pick the lowest premium because the policy may not give you the same cover as the others, or might have a much higher excess rate.

* Be scrupulously honest when consulting with a broker or insurance company directly, and always ask more questions than less. This includes asking for a detailed list of what is included and excluded from the cover, and what you will have to insure specifically under the all risks section, such as sunglasses and cameras which are often taken out of the home.

* Make sure that you will be covered if you go away for work or on holiday.

Under some policies the insurance company won't pay out if the home is unoccupied for more than 30 days a year. This is of particular concern to tenants who may be renting rather than buying specifically because they are often away from home.

* Check what the average payout time is for the insurance company of your choice, as well as the average annual increase in premiums for the past five years and see if these seem reasonable to you. Also ask if there are any unusual conditions you will have to fulfil for claims to be paid, and how long it will be before your initial premium is likely to be increased.

*Take a careful inventory and be careful not to undervalue your belongings or underinsure them in order to try and keep the premium down, as this can result in the insurance company paying less than the actual value of the goods if you do have a claim.

Article by: www.nationlinkproperty.com