Tenants Insurance - A price worth paying
In 2011 there is set to be a massive influx of people renting due to either not being able to afford to buy or just biding their time until the housing market settles. Property prices are continuing to fluctuate, with February’s 0.9 per cent decrease cancelling out January’s 0.8 per cent increase. Some experts believe there could be a massive correction in house prices, with a drop between ten and twenty per cent, whilst others believe that prices have already stagnated and will have continuous minor fluctuations month on month.
So as a tenant, apart from the initial moving in, there is not really much else to be concerned with is there? Well you’d be wrong. The property itself and any furnishings supplied by the owner of the house will be covered under a landlords insurance policy, but what about all your possessions?
If you have a look round at all your possessions and add up the value of them all, you could be looking at £10,000 plus worth of items. If the worst was to happen and there was a fire or your home was burgled, could you afford to replace everything?
In a modern day home, you could easily add up £2000 with only five items.
- HDTV - £600
- PC or Laptop - £400
- Ipod - £100
- 3-piece suite - £700
- Games Console - £200
That is why it is important for tenants to insure their possessions with a tenants insurance policy.
How much cover do I need?
In the event of theft, damage or loss, tenants insurance will cover the cost to replace/repair the items. There are two types of coverage for you to think about.
- Indemnity policy – When making a claim, this will take into account wear and tear and depreciation of your items. So they payout on any item you claim for will only reflect its current value, not the amount you purchased it for. Usually this is the cheaper of the two options.
- “New for Old” – This policy will replace the item that is lost or damaged with a brand new one. This is ideal for covering electrical goods or furniture. For example, if five years ago you paid out £800 for a sofa, the previous cover would only payout its current value, say £200, this type of cover would allow you to buy a new sofa for the same value you bought it at.
Extra cover is also available but usually at an extra cost. Accidental damage, high value cover and home emergency cover are just some of the additional extras you can add to a policy.
Add up the value of everything you want covered by your insurance policy. To make it easier, sort everything by a room by room basis. Do not forget items that are usually stored in the loft, garden or your garage.
There are also steps you can take to make your policy as cheap as possible. Each policy will come with an excess payment. This is the amount you will need to pay out before the insurer covers the rest. Increasing the excess will reduce the annual premium. Also try to pay the annual premium off in full, as when paying monthly you will be subject to interest on the full amount. Precautionary measures such as burglar alarms, high quality locks and even joining a neighbourhood watch scheme will all help reduce your policy. Finally, shop around. Comparison sites like confused, compare the market and moneysupermarket will all compare a host of providers for you in minutes.
