Home contents insurance: a must for tenants

One of the many advantages of being a tenant is not having to worry about homeowners' insurance, which covers the structure of your home. This type of insurance, which is also commonly known as building insurance, provides help for the owner in the event of the building structure being damaged by things beyond anyone's control, such as a burst pipe, flood or fire. However, this insurance does not cover your valued possessions, and it is your responsibility as a tenant to ensure that you are covered by household contents insurance.

The ins and outs of household contents insurance

Household contents insurance is relatively inexpensive (generally much cheaper than your car insurance.) It covers the cost of your personal possessions such as furniture, kitchenware, appliances and the like in the event of a disaster. It provides immense peace of mind, because if 2020 has taught us anything, it's to expect the unexpected. If your home burns down, is broken into or becomes the site of an "act of God", then your household contents insurance will help you cover the cost of replacing your possessions.

It's easy to believe that something like a house fire or burglary will never happen to you. While this is hopefully true, there are no guarantees in life. Also, a household contents insurance policy covers you for a variety of other scenarios, such as fire damage from a lightning strike or water damage from a burst pipe or geyser. Depending on the specific policy that you have, your household contents insurance can even cover the cost of temporarily renting another place to stay if  your home is too damaged to live in.

The risk of underinsurance

If you are underinsured, it means that you underestimated the value of the contents of your home when you took out your insurance policy. The first step to getting a household contents insurance policy is to have a good idea of what the contents of your home are worth and how much it would cost to replace everything. It's no use excluding the lounge suite that was a gift from your parents, because in the unthinkable event of a house fire, for example, you will need to pay for the lounge suite to be replaced. Insurance companies undertake detailed investigations if you make a claim, and if they find that the value of your household contents was underinsured, they are likely to only pay out a portion of your claim.

What is excluded from a household insurance policy?

Depending on your policy, items which you carry around with you may not be covered by your household contents insurance policy. This includes items like cell phones, cameras, laptops and jewellery - and they may not be covered even if they are stolen or damaged while in your home. You will likely have to insure these separately, as they are high-risk items.

Once you have taken out a household insurance policy, make sure you have read the fine print and have a clear understanding of what you are covered for. Don't be afraid to ask questions - either of your insurance broker or of the insurer.

Three quick facts about household contents insurance

1. Anyone can take out a household contents insurance policy - whether you are a homeowner or a tenant.
2. Household contents insurance is often separate to all-risk insurance, which covers specific items like watches, cellphones and laptops.
3. Household insurance may cost you a couple of hundred Rand a month, but can save you hundreds of thousands of Rand in the event of a disaster.

For more information about insurance, properties on the market or properties to rent, contact the CSi Property Group today.