It is a common misconception that you don’t need home and contents insurance if you are not a home owner – this can be a costly mistake!
A tenant in a rental property can take out a contents insurance policy to cover their belongings both within and outside of the rental property, with a number of policy options available.
However it is not only important to insure your content items, but it is what comes along automatically with the policy that is extremely valuable – Liability Insurance.
We recently heard of a tenant who had lived in the same rental property for a number of years but failed to take out any form of contents insurance, believing there really wasn’t any point.
Considering the value of his items weren’t really worth that much, so why bother?
And what’s the likelihood of something happening anyway?
It wasn’t until a Friday night while preparing something to eat to sit down and watch the footy, he fell asleep with food cooking in the deep fryer.
The fryer quickly caught alight and in turn, burnt down the kitchen and the entire home!
Luckily the landlord had adequate insurance for the building and they were able to claim the costs of a complete re-build under their policy.
Not only had the tenant lost all of his possessions within the home, but he now has the landlord’s insurance company chasing him for recovery of the $200,000++ they lost on settling their insured’s claim.
Since the tenant did not have contents insurance himself he was unable to lodge his own claim to cover his losses or any liability he was responsible for as it was deemed he was negligent in starting the fire.
If he had his own insurance both insurance companies would have worked out a settlement/recovery between themselves with the tenant only having the pay an excess likely to be around $500.
He is now being chased by the insurance company to pay back the $200,000 and is at risk of being sued if a payment agreement cannot be met.
This is an extremely costly lesson to learn from a slight mistake that really could happen to anyone!