Tenants need insurance too

07 June 2007

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
burstgeyser, 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
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.

More.

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* 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.

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