The realm of home insurance has come to be progressively refined. Up until lately there was very much a “one size fits all” method by insurers resulting in policyholders buying a standard buildings and/or contents insurance policy that paid no regard to their actual circumstances. Consequently many policyholders were paying an insurance premium for parts of cover that were not related to them and that they could never claim against.

Insurers have increasingly realised that policyholders need more bespoke cover that reflects their individual circumstances and the many different ways in which we live in property today. Whilst standard home buildings and contents insurance policies continue to dominate the market for standard home owners who live in their own homes, other policies have become available to meet these changing needs. Landlord insurance, developed to meet the needs of professional and buy-to-let landlords, has seen an upsurge. More recently, tenants insurance has found itself in the spotlight.

Previously tenants insurance was a bit of a niche market, on the whole not considered glamorous and aimed mostly at students departing the parental home and moving into leased accommodation for the first time. Topical weather circumstances in the UK for example the extreme flooding that parts of the country have experienced, however, have emphasized the commonly low take up for home contents insurance, especially amongst those not owning their own home.

These elements have led to growing interest in tenants insurance policies by the insurance marketplace and equally potential policyholders, causing the relaunch of existing products as well as the progress of new products. But, who is tenants insurance designed for and what does it insure against?

Tenants insurance is designed for those who do not need to insure the building they live in but who do wish to insure their possessions. This includes those who rent either self contained or shared properties or those who are leaseholders and where the freeholder is responsible for insuring the building. Some insurers offer specialist policies specifically for students. Tenants insurance provides cover for a policyholder’s possessions, that is, those things that the policyholder can take with them when they move. This includes items such as clothes, laptops, CDs, curtains, white goods and valuable items, such as jewellery.

In its simplest form, a tenant’s insurance policy usually provides cover for loss or damage instigated by flood, fire or theft from the home location. There are numerous extensions to cover available, however. Ranging from extending the dangers insured against to also include storm damage, escape of water or unintentional damage, or encompassing the range of items insured, for example, frozen food following trouble with the energy suppliers. Policies can also be tailored to cover specified possessions whilst away from the home. Furthermore, many insurers offer “add ons” to the policy, for example legal expenses cover.

Of course, there are also a number of eliminations under a tenants insurance policy, a lot of which are typical across the trade, for example losses arising after the property has been vacant for more than thirty days. Exclusions differ depending on insurer, such as the condition for there to be forced entry for a theft claim to be covered. There is an on-going requirement to advise the insurer of any material fact, as with any insurer. This simple principle of insurance means that the policyholder is required to tell the insurer of anything that would affect the insurer in determining whether to give cover or defining what fee to charge for a policy.

The methods insurers use to charge for a policy fluctuates too. There are insurers who charge on the basis of the number of bedrooms in a home, known as a bedroom-rated policy. Whilst others charge based upon the total value of the contents being covered, known as a sum insured policy. Either way, policies typically contain a clause restricting the insurer to a maximum limit amount that it will pay out per item. Individual items above this amount need to be specifically mentioned to the insurer and noted on the policy.

The basis of settlement can also vary between insurance policies. Some insurers provide cover on an indemnity basis only, meaning that a policyholder is only entitled to be put back in the same position as before the loss. This means that a deduction is made for wear and tear on the damaged or lost items that reflects their age. The alternative basis of cover is new for old whereby the policyholder can claim the full cost of replacement of a comparable item.

Generally, the cover obtainable, the policy exclusions and the types of settlement under a tenant’s insurance policy is not that dissimilar from any regular home insurance policy. As such policies have been written especially with tenants in mind, though; the terms and conditions of the policy are appropriate and can be adhered to. Circumstances that are the responsibility of a home owner or landlord have been stripped out of such policies. Equally, a premium is not charged for cover that a tenant can never access.

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