If you’re renting, renter’s insurance can help you to protect yourself and your belongings. Luckily, renter’s insurance is one of the most affordable types of insurance. Of course, you still want to get the best deal. Keep reading to learn everything you need to know about renter’s insurance.
Who Is Renter’s Insurance For?
Renter’s insurance is for the tenant renting a house, apartment, or condo. A landlord will typically want to get their own landlord’s insurance policy to cover their risks.
What Does Renter’s Insurance Cover?
Most renter’s insurance policies come with two basic coverages — personal property and liability. You may also want to add additional living expenses.
Personal Property Coverage
Personal property coverage covers your personal belongings. That includes things like clothes, electronics, and furniture. If you own all or some of your appliances, those will usually be covered as well. Covered claims can range from burglaries to fires. As with homeowner’s insurance, you’ll typically need separate coverage if you want to protect your property from floods and earthquakes. Always check the exact language of your specific policy to see what is and isn’t covered.
When you buy renter’s insurance, you’ll select a dollar limit of personal property coverage. That limit should be equal to or slightly higher than the value of your property. Keep in mind that certain expensive items, such as jewelry and computers, may have limits that are less than your total limit and may require you to add special coverage. For example, you might have $15,000 worth of personal property, including $5,000 in electronics. You may think that a $15,000 personal property limit is enough, but not if it only includes $1,000 in coverage for electronics. You’d need to add $4,000 in coverage specifically for your electronics to be fully covered. Again, read your policy and work with your insurance agent to figure out exactly what’s covered and what limits you need.
Liability coverage protects you against certain types of lawsuits. The most common examples are your dog biting someone, your kid hitting a baseball through someone’s window, or you leave a sink running and flooding your downstairs neighbor. Exactly what type of claims are covered will be spelled out in the policy and may vary by insurance provider.
Additional Living Expenses Coverage
Additional living expenses pay for the additional costs if you need to temporarily or permanently vacate your rental home due to a covered disaster. For example, if you need to live in a hotel for a week during repairs, additional living expenses will cover the hotel bill and the extra cost of dining out versus buying groceries. If you need to move, additional living expenses will cover moving expenses and storage costs. Check your policy for details and limits.
What Does Renter’s Insurance Not Cover?
Renter’s insurance typically doesn’t cover the following types of claims.
- Damage to the structure unless the damage was your fault and falls under something your liability coverage covers. For example, if your rental home burns down because of a lightning strike, your renter’s insurance policy will only cover your personal belongings. Your landlord’s insurance will cover the cost of rebuilding.
- Security deposit claims. If you cause damage and lose your security deposit, your renter’s insurance typically won’t cover it. Note that there are other types of insurance products that can guard your security deposit.
- Roommates. Unless you’re living with family, your renter’s insurance generally won’t cover property owned by your roommate or liability for things caused by your roommate. They would need their own policy, or you’d need to both be on the same policy. Ask your insurance agent for the best approach based on your relationship with the people you’re living with.
Do You Have to Have Renter’s Insurance?
Many landlords require tenants to have renter’s insurance. Many tenants go in without realizing that the landlord’s insurance wouldn’t cover their personal belongings, so landlords want to make sure their tenants are protected. Landlords also want you to have liability coverage to make sure the landlord and other tenants are protected.
If your landlord doesn’t require you to have renter’s insurance, think about whether you could really afford to go out and replace all of your stuff at the same time.
How Much Does Renter’s Insurance Pay for Property Coverage Claims?
There are two common types of property coverage. The first pays for the current cash value of your belongings. This might be based on prices of similar used items or based on a depreciation formula using the original cost and age of the item. In most cases, this will get you pennies on the dollar of what it would cost you to go to a store and buy replacements. You can also get coverage for the new cost. This option lets you go to the store and buy an identical replacement brand new.
How Much Renter’s Insurance Coverage Do You Need?
Since property coverage is based on the value of your property, the only real question is how much liability coverage you need. You’d typically want at least enough to protect your net worth and may also want to think about covering your potential future earnings.
Talk to Your Insurance Agent
Your independent insurance agent is the best source of information for anything you want to know about renter’s insurance and where to find the best price. Contact Adam Johnston Insurance today with your questions or to request a quote.