More of us than ever before rent our homes. According to Statistics New Zealand around one in three Kiwi households rent, and research commissioned earlier this year by Westpac suggests that if we fast forward 25 years, Aotearoa could have more renters than homeowners.
This changing dynamic means that tenant and landlord insurance has never been more important. Not only does it offer protection and peace of mind, but it provides an essential safety net for both parties if the unthinkable happens – from accidents and unforeseen weather events to burglaries and devastating fires. And if recent years have taught us anything, it’s that the unthinkable can happen.
Landlord insurance typically covers property damage, loss of rental income and liability claims; tenants’ insurance protects renters’ personal belongings from theft, damage or loss (and liability, depending on the cover).
But every landlord and tenant situation is different, so how do you know you’ve got the cover you need? And what is the best way to safeguard your assets – whether that’s an investment property or the contents that reside within it?
If you’re a landlord renting out your property, landlord insurance cover plays a starring role in protecting your investment.
“A landlord policy is like a home policy but includes differences to reflect the impact of renting out your house,” says Patrick O’Meara, Communications Manager at the Insurance Council of New Zealand (ICNZ).
“Some key responsibilities that landlords should be aware of include taking care in selecting tenants (satisfactory references for example), collecting rent in advance, collecting bond (at least two weeks and register it with the government’s Tenancy Services), monitoring rent in arrears and inspecting your rental property regularly.”
And as AA Insurance Head of Product Matt Hickey explains, making sure you have the right level of cover is paramount.
“Like with home insurance, it’s important that the sum insured accurately reflects what it would cost to rebuild the property, and that you regularly review your sum insured, especially if you make changes or improvements to your property,” Matt says.
There are several ways to calculate your sum insured, from calling in the experts (a builder, architect or quantity surveyor) to getting an estimate from an online calculator.
If your property is part of a body corporate, you may already have insurance cover in place, but it’s vital to understand the extent of it, as it may not include things like curtains, fridges and washing machines, which are typically covered under a contents policy.
For those who rent, contents insurance plays an important role in protecting themselves and their possessions. Matt explains: “It doesn’t just cover you and your belongings; many policies also include legal liability if you accidentally damage someone else’s property and can help should your rental home become uninhabitable after an event such as a flood or fire.”
If you’re insured with AA Insurance for example, they’ll cover the difference above the rent you were previously paying while you’re in temporary accommodation for up to four weeks, as well as the cost to move and temporarily store your things.
Some insurers offer a range of options for different needs and budgets. “At AA Insurance, our ‘Limited Contents’ insurance cover may suit customers that only want to cover the events that are hardest to recover from, such as burglary, storm, fire, flood and natural disaster, with the option to upgrade your cover to include theft and accidental damage and loss of mobile phones and laptops.
“If you lose all your belongings in one go, like a flood or fire, it can be a huge set-back financially if the cover you have in place isn’t enough,” Matt adds. “Everyday items like cutlery, bed and bathroom linen, plus clothing and sunglasses can really add up. It’s a good idea to go through all your belongings, room by room, and work out how much it would cost to replace everything. Online contents calculators can also help provide estimate replacement costs.”
We all want to protect ourselves and our stuff, and whether you’re a landlord or a tenant, insurance is an integral part of that. Get a handle on your cover by getting in touch with your insurer – and look closely at the policy wording to avoid any nasty surprises come claim time.
Story by Vanessa Trethewey for the Summer 2024 issue of AA Directions Magazine. Vanessa Trethewey is a freelance writer who regularly contributes to AA Directions magazine.
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