When you purchase a property, you need homeowners insurance, with the consequences of failing to do so being catastrophic. Because homes are such an expense, often representing the owner’s life savings, losing it and everything in it has severe financial ramifications.
However, not everyone owns a house. In fact, 36% percent of people lease their living spaces. Though this demographic of people may not lose their life savings in the event of a disaster, they still may lose all of their possessions if they are uninsured for them.
If you’re a renter considering whether you should purchase renter’s insurance, learn precisely these policies cover, to what extent, and how to buy your own policy. In addition to protecting your belongings as well as providing liability coverage should a visitor injure themselves in your home, your landlord may also require you to have coverage.
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What Is Renter’s Insurance?
Renter’s insurance is a bit like homeowners insurance, except it’s designed for renters and does not cover the structure of the rental unit or home, such as its walls, flooring, and roof. Think of it as coverage for everything inside the walls of your apartment or rental home.
Renter’s insurance will cover:
- Theft or damage to your property that’s within your apartment
- Living expenses if your residence is unlivable after a covered loss and you have to temporarily live elsewhere
- Personal liability if an injury occurs on the property or if you damage someone else’s property
In most cases, the personal liability portion of renter’s can travel with you. For example, if you’re at a friend’s house and accidentally damage something, your renter’s insurance may cover the expense of repairing or replacing it.
Your renter’s policy would not cover damages to the structure of your rented home. Instead, your landlord has their own insurance on the property, and that policy covers damage to the building but will not cover any damage or losses to your personal items.
Is Renter’s Insurance Required?
Some landlords require tenants to have renter’s insurance; this is a layer of protection for them and you. However, outside of their requirements, there are no legal mandates for renter’s insurance coverage. But even if your landlord or a property management company does not require you to get renter’s insurance, it’s still a good idea to have because it protects you against potentially steep losses if your belongings are damaged in a covered event.
What Does Renter’s Insurance Cover?
Within your renter’s insurance policy is a list of covered perils, typically including:
- Fires and smoke damage
- Certain water damages
- Lightning
- Windstorms and hail
- Freezing
- Vandalism and theft
- Damage from aircraft or vehicles
If these perils in your policy occur and damage your possessions, your coverage will help pay for your losses and damages. Additionally, If one of these perils happens and the entire building is damaged, your renter’s insurance will help cover your living expenses as you wait for repairs or a rebuild. Keep in mind that standard renter’s insurance policies do not include coverage for floods or earthquakes, though you may find endorsements or stand-alone policies to provide protection against those events.
Renter’s insurance also includes liability protection, which pays for the medical expenses of visitors who are injured on your property. This includes if you have a pet who bites or scratches a guest. Your policy may also cover legal fees if there is a lawsuit brought against you because of an injury.
How Much Does Renter’s Insurance Cost?
Renters insurance typically costs between $15 to $30 a month, depending on a variety of factors such as:
- Where you live
- Your claims history
- Your credit history
- The policy’s deductible
- The amount and type of coverage you choose
- Any additional endorsements or riders added to your policy
- Whether you have bundled policy discounts and other discounts
Keep in mind that pets do not generally affect the price of your renter’s insurance, though some pets, such as certain dog breeds that may be considered higher risk, may limit your insurance plan options.
Another factor that can change your premium is your deductible, which is the amount you pay out of pocket for each claim before your insurance steps in. For example, if you have a $500 deductible, you would be responsible for paying $500 on every claim you file before your insurance kicks in to pay for the rest. If you opt for a high deductible, your premium will be lower, but you’ll pay more out of pocket if there is a covered event. A low deductible will mean higher premiums, but your insurance pays out sooner than the alternative.
How To Get Renter’s Insurance
If your landlord requires renter’s insurance, check to see if they have any specific requirements and if their policy already has some coverages for you. Then, ensure you’re getting the coverage you need for your property at a reasonable rate. Doing some legwork ahead of time can help you get a better idea of how much coverage you need and what to expect from your renter’s insurance policy.
Understand What’s Covered by Renter’s Insurance
Each renter’s insurance policy is a little different, so you’ll want to look closely at what possessions and perils they include. Make sure to pay attention to policy caps on possessions to ensure there is enough coverage to reasonably replace your items, and look for any exclusions that might apply to your possessions.
Your renter’s insurance policy will most likely not cover business equipment, expensive jewelry, works of art, and collectibles stored in your rented home. These items exceed the value of most renter’s policies and require a separate policy or rider for coverage. Most household and personal possessions like clothing, televisions, other electronics, furniture, and miscellaneous items will be covered.
Looking at the named or excluded perils is also essential, especially if you live in an area prone to specific natural disasters. Renter’s insurance policies generally do not cover earthquakes and floods. These gaps could be critical; for instance, if you live in Florida and are worried about hurricanes, you might need to explore adding a rider or additional renter’s insurance for hurricane coverage.
Estimate the Value of Your Personal Property
Estimating the value of your property is a critical step to getting the right amount of coverage and reimbursement if you have to file a claim. Do not discount how much your possessions may be worth. Even college students who are on their own for the first time and have not collected a lot of belongings might be surprised at the estimated value of their items, especially electronics.
While you’re making your estimates, it’s a good idea to take pictures of the items, record serial numbers if possible, and save receipts or write down the estimated cost at purchase and the estimated purchase date. If there is ever a situation where your property is damaged, collecting this data beforehand will save you a lot of time and might help you receive more reimbursement than you would if you didn’t have this information.
Research Renter’s Insurance Companies and Compare Quotes
Shop for the right policy by comparing offerings. Where you live can play a significant role in the coverage available, so a regional comparison is critical. Check each policy for the named perils and upper coverage limits. This information will tell you if you’re in the right ballpark with the criteria you’ve already established.
Once you’ve determined your individual and customized needs, you can get quotes from different insurers to determine which plans would give you the most comprehensive coverage for your budget.
Mistakes to Avoid When Buying Renters Insurance
One of the biggest mistakes a renter can make is not getting renter’s insurance at all. But there are pitfalls to avoid when you do decide to get coverage:
- Not getting enough insurance. If you have valuable items (jewelry, electronics, heirlooms, etc.), ask about rider policies that add more protection.
- Not knowing the covered perils. Do not assume that everything is covered. Instead, read the policy to see what is covered and then ask if there is additional coverage you can get for non-covered perils like floods or natural disasters.
- Accepting set living expense coverage. If you’re without a place to live, this standard benefit helps but will not cover all your expenses. Upping this limit can be a significant benefit, should you need it.
The most prudent thing to do is to make sure you’re getting the right amount of coverage. You do not want to pay for coverage you do not need, but you also want to avoid finding yourself without coverage that you did need.