So you’re currently renting, and you’re not sure if you should get renters insurance.
What does renters insurance cover? Doesn’t the landlord’s property insurance protect you and your belongings? How much is it going to cost? And what is the cost dependent on?
These are all common questions you might have about renters insurance. We’ll answer all of them and more as we go through the ins and outs of renters insurance so you can figure out if it’s the right move for you to make.
We’re going to cover:
- What is Renters insurance?
- What Does Renters Insurance Cover?
- What Does Renters Insurance Not Cover?
- How Does Renters Insurance Work?
- Is Renters Insurance Necessary?
- How Much Renters Insurance Should I Have?
- How Much Is Renters Insurance?
So let’s get straight to it!
Renters insurance is a policy taken out to protect a renter and their belongings from unexpected personal property damage or legal liability.
You can takeout a renters insurance policy if you are renting:
- An apartment
- A house
- A condo
- Any living space
When you rent, your landlord will be responsible for the building structure itself. But, your personal belongings that you keep inside of that structure are 100% your responsibility.
Renter’s insurance is an affordable way to safeguard yourself in the case of an unexpected event. Just like your landlord protects their building with a homeowner’s insurance policy, you need to protect yourself and your things with a renter’s insurance policy.
What Does Renters Insurance Cover?
When you choose your renter’s insurance policy, you’ll need to specify the amount of coverage you’d like.
There are four coverage types:
- Personal property damage
- Personal liability
- Medical Payments
- Additional living expenses
It’s important that you know what they are and what they all cover to have a better understanding of what renters insurance covers.
Personal Property Damage
If your personal belongings are covered under your stipulated perils under your policy, your insurance company will cover the cost of these damages if something were to happen to them.
Personal property includes almost everything you own, both in and outside your rental unit or home.
Before you purchase a policy, you should take inventory of everything in your home. Doing this will allow you to figure out how much coverage you’ll need in order to fully cover all of your belongings. Make sure you keep this information somewhere safe and easily accessible for when you might need it.
When it is time to purchase the policy, make sure you understand exactly what you’re covered for.
Not every possible cause of damage will be covered under renters insurance. Plus, there’s no set standard for basic coverage, so each company will have their own policies. Make sure you understand the specifics of how your policy works, and what it covers.
Here’s what’s covered under most Renters Insurance policies:
- Fire and Lightning
- Wind and Hail
- Smoke Damage
- Water Damage
- Falling Objects
- Storage Units
- Snow and Ice Collapse
- Renters Insurance Covers Fire and Smoke Damage
Most renters insurance policies will allow you to add additional coverage as well. For example, floods are not something that are commonly included in a basic renters insurance policy. But if you live in an area where flooding is common, you may benefit from purchasing additional flood coverage that’ll protect your belongings if one were to occur.
If someone were to get injured while at your rental property, they may decide to take legal action against you. Personal Liability coverage will help to offset the costs associated a lawsuit or damages.
A typical renters insurance policy will include $100,000 in liability coverage protection.
Once a lawsuit is in motion, this money will mainly go towards attorney fees which can add up quickly. So, having good liability coverage can be a huge weight off of your shoulders.
Your renters insurance policy also includes the cost of medical payments if someone were to get injured on your rented property. Medical expenses can be very expensive and having this type of coverage can be extremely helpful.
It may include:
- Surgical procedures
- Dental expenses
It doesn’t matter who’s fault it was or what caused the injury, it’s all covered under your policy.
As mentioned before, each company is different and some insurance companies may offer higher coverage limits than others. These limits fluctuate from $1,000 to $5,000.
Don’t forget- The cost of medical payments will only be covered for guests in your home. This will not apply to anyone who lives with you or is listed under your policy.
Additional Living Expenses
If the home or apartment you are renting becomes unlivable, your renters insurance will pay or help you pay for the cost of living somewhere else.
In order for this to happen, you’ll have to place a claim. Once your insurance company has acknowledged the loss and confirmed it is covered, then the policy will kick in.
Your hotel and food will be covered up to the limits of your policy. If you live in an expensive city, the recommendation is to increase this limit to make sure that you will be fully covered if you end up in this situation.
What Does Renters Insurance Not Cover?
Not everything is covered under your renters insurance policy, even some things that you might think it should include. There are certain perils that are not usually covered, but it’s possible that you can purchase additional coverage for them.
Below we’ve listed some of the most common exclusions in a renters insurance policy.
- Bed bugs and other pests
- Damage to your car
- Your roommate’s possessions
In case of earthquake damage, you have the option to add additional earthquake insurance, or a policy endorsement.
When it comes to pests, you’ll have to pay out of pocket for an extermination service to take care of the issue for you.
Your insurance policy does include any coverage when it comes to damage to your vehicle. The responsibility of any damage to your car falls under your car insurance policy’s comprehensive coverage. However, your renters insurance policy might cover theft from your vehicle. Be sure to check your policy for specifics.
Only your belongings are covered under your policy. So, if there was a fire in your rental property and both you and your roommate’s things are damaged, you can only add your roommate’s possessions to the claim if they are on the policy with you. If your roommate is not on your policy, you should not add their belongings to your claim.
If you decide to add someone to your policy, consider increasing the limits on your policy as well. In the event of a loss, your claim will be divided equally among everyone listed on the policy.
Some insurers exclude aggressive dog breeds from their policy and might even deny you coverage because of the dog’s breed. Plus, there are other exotic animals that may not be covered either, like monkeys or reptiles.
How Does Renters Insurance Work?
Once you’ve calculated how much coverage you’ll need, you’ll go ahead and signup for a policy with the insurance company of your choice.
In the event of a loss, you’ll have to provide the insurance company with a complete inventory of your now damaged possessions. Be as accurate as possible when determining the value of your things.
Make sure that you are able to explain the damages, and the cause of them. Once you’ve gathered this information, you’re ready to file your claim with your insurance provider.
The insurance company will investigate and analyze your claim, including sending an adjuster out to verify the reportedly damaged items. This is when the reimbursement amount will be decided upon.
Keep in mind that these claims tend to take a long time. It’s recommended that you have all the paperwork done on your end so you can accelerate the process and receive your compensation sooner.
Is Renters Insurance Necessary?
There is no obligation to have renters insurance; it is completely voluntary. However, it’s a smart move on your part to protect yourself from the unexpected.
If you decide to get a renters insurance policy, you’ll be saving yourself the headache of paying a large sum of money out of pocket in the case of your property being damaged or stolen.
Plus, your medical and legal fees will be covered under liability protection. So you don’t have to worry as much about someone getting hurt on your property.
If you’re renting an apartment and have never found yourself in a situation of loss in your home, you may not think you need #renters insurance.
But those who have experienced something like a break-in or fire know its importance.
— Get Out of Debt (@getoutofdebtcom) January 24, 2019
How Much Renters Insurance Should I Have?
There are many factors that will determine how much coverage you need. Most importantly, it will be determined by the value of your personal belongings and the amount of liability coverage you’d like to have.
As mentioned before, start by taking an inventory of your belongings. Take a look at every room and what’s inside. Determine the item and the approximate value of that item. This will facilitate the process for you to determine how much coverage you need.
Make sure to take note of your most expensive items, such as:
- Valuable collectibles
We sometimes tend to assign a smaller value to our belongings than they are really worth. Try to be fair to both yourself and your insurer when determining the value of your possessions.
Next, you’ll need to figure out how much liability coverage you need. Don’t forget that this will help you cover legal fees if someone were to sue you because of an injury in your rental property.
Legal expenses can be very pricey, so make sure that you select the proper amount needed and add it to your policy.
Once you’ve gathered all of this information, you’ll be able to request a quote with a renters insurance company.
Everyone’s situation is unique, so the amount of coverage you’ll need will be based on analyzing how much you own, and the amount of liability coverage you’ll need.
When you reach out to an insurer, they might suggest that you take a little more coverage to make sure that all of your belongings are fully covered. Whether you do or not is completely up to you.
How Much Is Renters Insurance?
Renters insurance is typically anywhere between $15 to $30 a month.
Factors that make renters insurance vary are:
- Size of the rental property
- Amount of coverage you’ll need
Keep in mind that places that are exposed to hurricanes, tornadoes, and severe thunderstorms tend to come with a higher premium. But when you do the math, $180 to $360 a year is nothing compared to the benefits you’ll have in the event that something happens.
Renters insurance is a great way to protect your personal belongings and your budget from the unexpected!
An accident could put you in the red and derail your financial goals, but renters insurance is there to make sure you’re safe no matter what.
Considering it costs under $30 a month on average, it seems like a no-brainer.
Renters insurance is a savvy financial move that’ll protect you and your money in the long run.
Do you have renters insurance? Let us know in the comments!