Janine Ogier: Traps await unwary flatter

Students and young people move to the big city for work or education or move out of home into a flat, taking with them the stereo, clothes, CDs and, if they're lucky, a laptop.

Often all their worldly possessions can be placed in their car and then into a flat.

Moving away from home is an eye-opening experience in itself, with all the excitement and hassles of stepping out on your own for the first time and getting sorted at university or the first job. So who's thinking about insurance?

The problem is that many young people get caught out if they do not think about insurance, as there are pitfalls galore for the uninsured.

Instead of a caring parent ensuring doors and windows are locked, heaters are turned off and not left with clothes drying on them, and the cooking area is clean and safe, young people have to shoulder all the responsibility.

Landlords and insurance companies will take steps against flatmates to cover their costs in the case of damage and loss in a flat. Tenants can negotiate a settlement or defend the case in court.

Some landlords even make contents insurance and public liability cover compulsory in their lease agreement.

Insurance Ombudsman Karen Stevens says many young people mistakenly believe they are still covered by their parents' policy.

For some students, in a hostel situation, this is true - they may be covered by their parents' policy if they go home for the holidays and are still legally lodged at their parents' home. It's all in the small print.

But those who have left home and are flatting are no longer covered by their parents.

Perhaps you think you could do without your assets or replace them yourself in your budget if something untoward happens, but you still have to consider your responsibility in a flatting situation.

Accidents and simple mistakes happen. Irons get left on, oil gets spilled around the cooking area, people leave clothes and linen on top of heaters to dry or leave a heater on to keep a room warm.

But when property - a kitchen or bedroom or a whole flat - is destroyed, a landlord or insurance company can pursue tenants for the cost of replacement. That's a huge expense to load on to a young person.

A recent Canterbury case involved three young Kirwee flatmates who left a heater on in their flat while they were out, which caused a fire. The landlord's insurer sued them for negligence to recover what it paid out for the house.

Another example is the case of a Dunedin flatmate who was alone in a flat, put on his morning bacon and then forgot about it. The house burned down and, a few years later, six flatmates were in litigation over the recovery of the insurer's bill.

Although it was accepted that the other five were not a party to the negligent act, because their names were on the tenancy agreement the law holds them all liable.

Contents insurance with a public liability attachment provides security for flatmates. In the case of theft, young people have to beware of the view insurers take of parties.

Sure, a genuine stranger might steal something from your flat during a party. But if that person was at the house under a general party invitation which meant friends of friends of friends turned up, you are not covered.

Similarly, someone's cousin's friend's friend staying in the house might take off with the stereo, but as the person was a guest, insurance companies don't cover the theft.

Another situation to watch out for is when you have all your possessions in your car, perhaps on the day of the first move or when shifting to a subsequent address.

Contents insurance is unlikely to cover you for that time in transit so don't let the car out of your sight.

Also, that hole in the wall a partygoer left after the latest flat shindig would not be covered under insurance. If the landlord is also not covered, the flatmates can be sued to pay for the repairs.

If flatmates are getting a joint insurance policy, people have to make sure everyone is honest and open with regards the questions the insurer asks. Beware, as you might not know of the insurance history or criminal background of a flatmate. Any wrong details can hit you later if you make a claim and some missing information comes to light. An insurer can void or cancel a policy.

Some insurance companies won't cover young people flatting as they consider them simply too high a risk.

But shop around for the sake of security and peace of mind. Others will welcome your business, even if the premiums seem a bit steep to start with.