Insurance: Children flatting or at boarding school

The school year is coming to a close and for many the prospect of 1st year at university is just a couple of months away. Against all of your advice, your son or daughter has decided to flat with other students. What they will take with them is all their worldly goods, and some of yours. The total value hardly seems enough to worry about insurance cover. However, that doesn't mean they don't need insurance. In fact the insurance need is not so much about the few possessions they have but the necessity to protect them for any damage to the property they rent, even if it's not directly their fault. The following is an example of one of the hidden traps of flats. A new flat was rented in the names of all those occupying it. They each signed the agreement and opened a flat account to pay the rent and buy the weekly groceries. On returning to the flat one afternoon this new flat dweller is greeted by fire engines outside! There is a smell of smoke in the air and it doesn't take long to see the damage to the property. One of your new flat mates had, on leaving that morning, forgotten to turn off her hair straighteners. They had set fire to her duvet. Fortunately there is only smoke damage and a little bit of ceiling damage to her bedroom. Repairs are estimated at $100,000. The first thought is accidents happen and the landlord must be insured. The landlord did confirm he was insured and lodged a claim with the insurer. The property was repaired and during this time the flat mates had to make alternative accommodation arrangements. Those that had insurance were reimbursed the additional accommodation costs by their insurer. The crunch happened after repairs were completed and everyone had moved back into the property. Letters addressed to each of the flat mates arrived from the landlords insurer holding them jointly liable for the repairs and lost rent on the property. The tenants with insurance had no problem as they forwarded it through to their contents insurer. Each contents policy provides cover (normally up to $1m) for damage caused to other property.  Some of the other flat mates were able to lodge claims under their parents contents policies that extends cover while they are living away from home and attending an educational institution. But a couple of the flat mates had no insurance and the parents policy did not cover them either. So why were they being held liable? Surely it was the person who had caused the damage by leaving hair straighteners on the bed that was responsible for the damage? Under the Residential Tenancies Act parties to the tenancy agreement are jointly liable for the damage. While a parliamentary select committee reviewed the Residential Tenancies Amendment Bill and reported back to Parliament in September 2009, it would seem that there is unlikely to be any change in respect of the liability of tenants for damage to landlord's property. While the legislation awaits a second reading it is unlikely to undergo any significant change as Clauses in the draft that included a proposal to limit liability for damage caused by tenants to four weeks rent, have now been removed from the draft bill. It is therefore essential that anybody who shares a property and even in an informal sense, is a tenant of that property, and is running a risk if they do not have insurance protection for damage to the building. As has been illustrated in this story which as far fetched as it may seem, did actually occur. The lesson is to check to see if the parents insurance extends liability cover for children flatting/boarding etc while attending university. If not then make sure a new policy with cover for tenants liability is in place. It could save thousands. Most insurance policies we reviewed do extend cover to children living away from home while attending school or university. However some of the polcies only cover students living in halls of residence and some are more restricted and only cover children at boarding school. To be safe you should check with your insurer to ascertain exactly what cover they provide.