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If you’re a renter, you should consider protecting yourself with insurance. Renters’ insurance is something that less than half of renters get, yet it could be a financial decision you end up regretting.
You have to consider the fact that if you own a home, you’re often required to get homeowners insurance to protect that property, what’s in it, and to protect you if a visitor is injured, so why not give yourself the same peace of mind as a renter?
Compared to the benefits, renters insurance is relatively inexpensive. For example, renters insurance in Florida is just an average of $208 a year, and nationally it’s $188 annually.
Things to Know About
Below are the big things to know about renters insurance.
1. The Basics
Renters insurance is a type of property insurance covering losses to personal property, and it protects you, as the insured person, from liability claims.
This includes injuries that might occur in your rental property, not because of a structural problem. If injuries occur in your rental because of structural issues, that is the responsibility of your landlord.
You can protect any type of rental at all, from a studio apartment to a single-family home.
Even if you’re just living somewhere for a year, a renters insurance policy can be a good investment.
A lot of people think they don’t have anything of value worth protecting when in reality, they do.
It’s very likely that you have more than you could comfortably replace if you experienced a fire or theft, for example.
Even if you’re very careful in general, you can’t control what your neighbors might do if you’re renting a unit, like an apartment or a condo. Neighbors could leave gates open, start a fire or do any number of things that then put your home and the items in it at risk.
The property insurance of your landlord will cover the building itself but not your unit’s contents.
2. What It Covers
There are three primary elements of coverage with rental insurance.
The first is for personal possessions. It covers whatever the contents of your rented home are. The named perils can vary depending on your policy but often include vandalism, fire, theft, plumbing, and electrical issues, some weather damage, and other hazards that may be named.
There’s something called a standard HO-4 policy that covers personal property losses because of events ranging from hail to explosions or riots.
Floods and earthquakes aren’t covered by a standard rental policy.
Some landlords require renters insurance before you sign a lease.
Specifically, rental insurance might cover personal property, like your furniture, electronics, clothing, and other belongings. It may cover what’s called loss of use, which would mean expenses like hotel stays if you had to live somewhere else while your home was being repaired. Liability pays if you’re responsible for injuries to other people or their property damage. Medical payment coverage is for injuries to other people that occur in your home, no matter who’s at fault.
3. Optional Coverage
As well as what’s considered standard coverage named above, you can also pay a bit more and customize your policy to add more coverage. Examples of optional, additional coverage include:
- Replacement cost coverage: If you have a standard renters policy, it will pay to replace your belongings based on something called actual cash value. If you have a piece of furniture that’s ruined, but it’s a decade old, your claim check would likely be enough only to cover a used sofa. If you wanted a new sofa, you’d have to pay the difference. If you get replacement cost coverage, you get the cost of replacing lost items with ones that are new.
- Scheduled personal property: Renters’ policies will usually put a cap on what’ll be paid for items of value like electronics, jewelry, and firearms, especially with theft. If you want coverage for items worth more than the limit, you need to add a scheduled personal property endorsement.
- Water backup: With this coverage, you can add-on protection if your sink, toilet, or another drain backs up and your rental unit fills with water.
- Pet damage: If you have a pet-friendly rental and your pet causes any kind of damage, this type of protection will help with repair and cleanup costs, so you don’t have to give up your security deposit when you move out of your unit.
- Identity theft: Some insurance companies offer additional coverage for expenses that are associated with identity theft, such as covering credit monitoring and legal fees.
4. What’s Not Covered by Renters Insurance
Every insurance policy is going to have certain exclusions, including renters insurance.
Flood damage is something unlikely to be covered, including flooding from heavy rainfall.
Earthquake damage is likely uncovered, as are infestations like mice or bedbugs.
If you have a roommate, your insurance probably won’t cover their belongings unless you both share a policy, and not every company will allow that.
If someone were to steal your car from the property of your rental, that would be something you’d file a claim for under your car insurance comprehensive coverage. If you had personal belongings in your car, like your laptop, in that case, your renters’ coverage could kick in.
5. How Much Coverage to Get
The amount of renters insurance you get will depend on the number of things you have, the value of those things, and what your assets are worth. The more you could potentially lose, the more coverage you should plan to get.
It’s a good idea before you buy renters insurance to go over your belongings and decide how much personal property coverage you want to buy.
Renters insurance, especially compared to homeowners insurance, is fairly inexpensive and can be a good thing to have, even if you don’t think you have much worth protecting. It’s common to underestimate how much you do have and then how much you could lose if something unexpected were to happen, so you don’t want to find yourself in that situation.