Renters’ insurance isn’t just nice to have; the right plan can shield you in several important ways. Here’s how renters’ insurance works, and what you should look out for when choosing a plan.
Moving out on your own looks set to become a lasting trend in Singapore, with high property prices and rising home loan interest rates. It's little wonder that more Singaporeans have been turning to co-living spaces or renting in lieu of home ownership.
While undeniably an exciting rite of passage, getting your own place can be a fraught experience. You never know if you’ll end up with a prison warden of a landlord, or housemates with a shaky understanding of fire safety.
Should your roommate Becky once again forget to turn off the stove – this time burning down the kitchen, along with your expensive Cuisinart mixer and luxury knife set, you won’t be able to claim compensation from your landlord.
This is where renter’s insurance comes in handy.
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What is renters’ insurance?
Renters’ insurance is a home insurance plan that covers renters and tenants against loss, damage or liability when renting a residential property or room.
It protects you from the financial costs of replacing or repairing your belongings brought into your rental space, due to fire, flood, smoke or other insured perils. Theft and burglary are also commonly included in renters’ insurance, as are your liabilities.
What does renters’ insurance cover?
Renters’ insurance primarily cover:
- Your personal belongings and possessions, such as clothes, furniture, electronics, and valuables
- Your liability to third parties, in instances where there is injury, damage or loss caused by you, whether directly or indirectly
Besides these two areas of coverage, renters’ insurance may also include personal accident and medical benefits.
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How does renters’ insurance work?
Going back to the kitchen fire caused by Becky’s poor attention span, your renters’ insurance policy allows you to claim for the cost of replacing your Cuisinart mixer and luxury knives – but only up to the policy limits, more on this later.
Becky lies and pins the blame on you, and your long-suffering landlord decides to sue you for the costs of restoring the kitchen (just so he doesn't have to listen to Becky’s whining anymore). The liability coverage in your renters’ insurance can be used to settle the claims levied against you.
During a party you are hosting, your guest slips and falls because Becky didn’t clean up a spill. The injured guest decides to sue you for the medical bills. You can use the third-party liability cover in your policy to cover the costs of the settlement.
Ruminating on your misfortune of having a roommate like Becky, you open your window for a breath of fresh air. A mosquito flies in and bites you, inflicting you with dengue fever. The silver lining is that you can use the medical benefits in your renters’ insurance policy to offset the cost of hospitalisation and medical treatment.
Note that the hypothetical scenarios may not be covered by every renters’ insurance plan; we’re just highlighting what’s possible. As with all insurance policies, the actual scope of coverage – and extent of benefits – varies.
This is important because insurance claims often have per-item limits. For instance, say, the overall benefit for loss or damage of personal belongings is S$20,000, but there is a per-item limit of S$500. This means your plan will not fully cover the cost of your thousand-dollar luxury knife set.
If you have high-value belongings, it might be worth getting a separate valuables plan to cover them (or consider storing them in purpose-built facilities).
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Do I need renters’ insurance even though my landlord has insurance?
Yes, you do.
Your landlord’s home insurance policy only covers belongings and items that belong to them.
This means that should the entire property be flooded due to a burst pipe, or should a burglary takes place, the landlord’s policy will only cover the costs of replacing and repairing the property’s structure, furniture and their personal belongings.
But that’s where the line stops; your personal belongings will not be covered under the landlord’s policy, which means you’ll have to take the financial loss if you don’t have your own policy.
However, if you suffered bodily harm or injury, you may claim compensation for medical expenses and damages against the landlord’s home insurance plan.
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What should renters look out for when choosing a plan?
Tenants should take care to make sure their renters’ policy fits their needs.
Mr Ho Kai Weng, Chief Executive Officer, the General Insurance Association of Singapore, said, “(Renters should) make a list of their belongings and calculate the replacement cost to help determine the amount of coverage needed.”
“Should you own expensive furniture or keep items such as limited-edition sneakers or expensive gadgets at home, you should opt for a policy that offers higher coverage,” he added.
This is crucial so as to avoid under-insurance – that is when the amount of coverage you acquire is starkly lower than the actual value of your items. When this happens, your benefits will be reduced, leaving you with even less financial protection.
In addition, Mr Ho urges renters to pay attention to the following:
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Understand what’s covered in your policy
“If you’re renting an old walk-up, issues such as poor plumbing would be more common, which may lead to damage of your furniture or personal belongings.
As some policies may only cover specific events, it is important to make sure that the necessary coverage is provided,” he said.
Consider if you need alternative accommodation benefits
For those who work from home, note that renters’ insurance does not cover against loss of income should a fire or other disruptive event prevent you from carrying on your work.
However, some policies include coverage for alternative accommodation, which allows you to quickly resume working from another location, such as a hotel room.
“With hybrid working being the norm and more people working from home, individuals are therefore strongly encouraged to purchase a tenant insurance policy that provides for alternative accommodation expenses to ensure minimal disruption,” said Mr Ho.
Find out if your policy covers actions by other tenants
Renters’ insurance typically covers events such as fire, flood or theft.
“Therefore, should a tenant’s personal belongings get lost due to theft, their tenant insurance policy may pay for the replacement or repair of those items, up to the policy limit,” explained Mr Ho.
On the flip side, this means that if your housemate or a fellow tenant destroys your expensive guitar due to carelessness or rowdy behaviour, you may have no recourse.
“Individuals renting in co-living spaces should speak with their insurer to find out more about policies that cover their needs,” he adds.
Conclusion – It’s all fun and games until someone breaks a window
Sharing a property with kooky or wild housemates can be entertaining and enjoyable, but always bear in mind that as a tenant, you are ultimately responsible for the place you rent.
Getting proper renters’ insurance is a responsible move for sure, but you should aim never to have to make a claim.
If you have to be the adult in order to keep things from getting out of hand, so be it. You don’t seriously expect Becky to step up to the plate, do you?