Household insurance: Why you need insurance when you're renting a home

Household insurance might sound unnecessary when you're renting a home, but without it, you could be stuck with a mountain of expenses in the event of damage, theft, an accident or a natural disaster.

Renting a home has many benefits, such as less admin and maintenance, and ultimately, less risk. But that doesn't mean there's no risk involved in being a tenant, and just like homeowners, those who rent still need to insure their belongings.

Let's look at why and what options are available to tenants.

Why do tenants need insurance?

Accidents happen, and so do many other incidents that could damage the contents of your home. Homeowners, including landlords, typically have building insurance or homeowner insurance, which covers a house's structure in the event of natural disasters or accidents. This form of insurance covers property against any fire, floods, torrential rain and malicious damage during a successful or attempted break-in.

But it doesn't insure the home's contents, such as the appliances, furniture and clothing. If an unforeseeable event damages a tenant's belongings, they have to be replaced at the tenant's expense - unless tenants have home/household contents insurance.

NS Property Solutions' property practitioner Dalene Kane points out that household insurance is more important than ever as ongoing load shedding in South Africa increases the risk of power surges, and with it, the risk of fire.

"Recently, one of our tenants experienced the dangers of a power surge first hand when a surge after load shedding caused damage to their fridge's electrical components," explains Dalene, who specialises in rentals in the Northern Suburbs of Cape Town.

"The damage caused a fire to start in the kitchen, and while the tenants escaped the home unharmed, their belongings sustained irreparable damage."

In scenarios like these, household insurance is the only way to recover some of what you've lost.

What is home contents insurance?

This type of insurance is also known as household contents insurance and covers the goods in your home. It often doesn't cover movables that travel with you when you leave the house, such as mobile phones.

According to the South African Insurance Association (SAIA), household insurance mostly covers:

• Furniture, including carpets, rugs and paintings
• Appliances such as a fridge, microwave, vacuum cleaner and television
• Clothing
• Linen
• Foodstuff in the fridge and freezer
• Groceries
• Personal possessions, including clothing, watches, glasses, jewellery and sports equipment

"It's important not to overestimate the value of items when you sign up for insurance as this could affect your payout if you ever need to claim," Dalene notes. "That said, it's just as important to insure the replacement value of your household items instead of their actual value."

The SAIA notes that generally cover is provided for damage or loss caused by the following events:

• Theft
• Fire
• Storm damage
• Flooding
• Lightning (some policies will exclude damage caused by power surges)
• Vandalism
• Earthquakes
• Landslides

When should tenants sign up for household insurance?

If you're about to become a tenant for the first time or you're moving out of a home you owned to become a tenant, it's best to get home contents insurance before you move into your new place.

Once you've signed your lease, shop around to compare home contents insurance quotes and choose the option that best suits your needs. This way, your belongings are insured right from the start.

What are landlords' responsibilities when it comes to paying for damage?

Dalene notes that landlords are contractually not liable for damage to their tenant's property, even if it's due to lack of maintenance. In some instances, tenants may have a legal case to hold landlords accountable for such damage, but the legal fees to pursue a case can be expensive, and success is not always guaranteed.

That's why it's vital that those who rent the home they live in get household insurance, even if it feels like a pointless expense. The cost of replacing your belongings in the event of an incident will be much more expensive.

Are you a homeowner? Make sure you have the right type of insurance for the property you own. Read our article on Home insurance: Do you really know what you're covered for?