Is it important to have home contents insurance for tenants in rental property?

Do you live in a rented house? Then you should consider taking out a home contents insurance policy. In today's article from Deco Alerta, aimed at consumers based in Portugal and provided by the Portuguese Consumer Rights Watchdog (Associação Portuguesa para a Defesa do Consumidor or DECO) for idealista/news, we look in depth at homes contents insurance in Portugal.

If you have a question for Deco, you can send it by email to decolx@deco.pt or by telephone to 00 351 21 371 02 20.

“I live in a rented apartment and I know my landlord’s insurance doesn’t cover the contents. I would like to know if I should take out a policy that guarantees my property in the event of an accident.”

In case of damage, you can receive the necessary amount to replace furniture, appliances and the rest of the contents of the house, which on its own makes home contents insurance an attractive option.

To determine the value of your house's contents, you should make a list of all the items you own and write down the amount you would have to pay if you had to buy them when you signed or renewed your policy. Calculate 10% of this amount and add it, in order to foresee possible price increases when the claim occurs.

In the event that you need to make a claim, some policies may reduce the amount of compensation according to the age of the items, in order to reflect the depreciation by use. Some insurers do not pay any compensation for damage caused to machinery or equipment purchased more than eight years ago (TVs and video players, for example) or more than five years ago in the case of computer equipment.

To ensure that you receive the correct amount in relation to your assets, the insured capital should be equivalent to the value needed to replace them with new ones. There are exceptions to this rule, which are considered special objects because of their high value:

• Pieces of art and antiques;
• Photo, sound and video cameras;
• Jewellery;
• Collectables;
• Weapons;
• Leather jackets.

If possible, choose policies that will pay out a full compensation, regardless of the age of the goods.

The value of goods does not remain constant over time. For this reason, the insured capital is automatically updated annually, based on the indices published quarterly by the Portuguese Insurance and Pension Funds Supervisory Authority (Autoridade de Supervisão de Seguros e Fundos de Pensões or ASF). There are three indices that are intended to reflect the variation in prices due to inflation:

• The value of the house contents;
• The value of the building;
• The combined value of the dwelling and the contents, when these insurance policies are taken out at the same time.

With regards to the insurance capital for home contents, over the years people usually buy new furniture, utensils, decorative objects, machines, etc., so the best thing to do is to arm yourself with paper, pencil and calculator every 4 or 5 years and update the values of the contents of your home.