By John Grant

When you move into rented accommodation then you are likely to be faced with a daunting number of bills; paying the bond, paying rent-in-advance, telephone and broadband connection fees, power, and so on.

It is little wonder that sometimes the decision to also get Contents insurance is postponed as it just doesn't seem a priority, particularly with all those other costs.

However, you really do need to have liability insurance cover. You need to protect yourself in case of damage to the building or the owner's chattels.

Cover for 'occupiers liability' comes automatically with contents insurance and in New Zealand it is normally for an insured amount of either $1 mil. or $2 mil. You can see our comparisons here of what other features are normally provided.

Everybody living in a property they don't own should have insurance protection for this. Buying contents insurance cover not only protects chattels and personal effects, but also includes the all important protection for any claims against the occupier for damage accidently caused to other people's property.

Importantly, this is the case even if the tenant and the owner are friends.

Why? Because damage to property that results in an insurance claim, brings another party into play - the insurance company. All the insurer wants is to be able to recover the amount they have paid out under the policy. Therefore they will initiate action to recover their costs from the party responsible.

This means the tenant who caused the damage will be the target of recovery action.

So regardless of the relationship, the insurer will do whatever is necessary including legal action to seek recovery of what has been paid under the claim.

The insured person (even if it's a friend) is obliged to allow this action by the terms of their insurance policy, and the action will be initiated by their insurance company in the name of the insured. If they don't then the insurer has the right to deny their claim.

Therefore having your own liability insurance cover is vital to protect yourself from the owners insurer.

The most affordable way of doing this is by having contents insurance cover. It is not overly expensive, with prices starting at around $300 for $20,000 contents insurance - and this include occupier's liability cover as well.