Most people know that if you have a mortgage homeowners insurance is required. But, if you don’t own your house you may be wondering if renters insurance is required. The answer is no, but the landlord may require you to have renter’s insurance.
Is Renters Insurance Required?
No state legally requires a renter to have renters insurance, so you might be able to skip it. However, it is possible that, although the state doesn’t require it, your landlord does.
A lease is a contract, and your landlord may require renters insurance as part of that agreement. Even if the landlord does not need it, renter’s insurance might help you get an apartment in a competitive market because it can protect the property owner.
Insurance providers design renter’s insurance to cover your property, some liability situations, and possibly housing if there’s catastrophic damage to the building. However, it offers some protection to the landlord as well. When your policy covers you, you’re less likely to sue your landlord for liability if anything happens. For this reason, landlords like to see their tenants have renters insurance.
How Does Renters Insurance Help Protect Me?
While renters insurance offers a little protection to your landlord, it’s all about protecting the policyholder. Even if mandatory renters insurance is not a part of your lease, you can benefit from coverage.
It’s vital to know that while your landlord has an insurance policy on their property, their policy will not cover your belongings. The landlord’s policy is just for the building, so getting insurance is a good idea.
When shopping for insurance, you’ll see that not all insurance plans offer the same coverage. When looking for renters insurance, you must consider the following coverage options.
Personal Property Coverage
Personal property coverage is part of a renters insurance policy that allows for your possessions or the stuff you keep inside your rented home. You typically can adjust the amount of coverage you have. You may also have some options for the perils, but you’re usually covered if fire, smoke, lightning, vandalism, or windstorms damage your belonging.
Liability coverage is a nice feature of your renter’s insurance and protects you against lawsuits for bodily injury or property damage that you have accidentally caused. It can also pay for damage that a pet causes. Perhaps you’re at a friend’s house, and your dog’s tail knocks over an expensive vase. Your liability coverage will help pay for that damage.
Additional Living Expenses Coverage
Additional living expenses or ALE coverage is there if your rented home is destroyed or made unlivable by a disaster that your policy covers. One example is a fire in your building with extensive smoke damage. If this happens, your ALE will help pay for temporary housing. It might also help with hotel bills, meals, and other related expenses.
What Are the Benefits for Landlords
Landlords want responsible tenants, and potential renters with insurance or who are willing to get insurance are more appealing. Still, there are other reasons that landlords want tenants to have renters insurance. The primary reason a landlord may require renters insurance is that it benefits them in the following ways:
- The policy reduces the risk of a lawsuit.
- It helps with relocation expenses in case of a fire or natural disaster.
- Landlords enjoy peace of mind if the peril damages their tenant’s property.
- Renter’s coverage allows for more flexibility regarding pets.
- It can lower the chance of an insurance premium increase after a claim.
The direct benefits to a landlord are not as great as they are to the renter, but there is still an upside to requiring renters to have insurance.
How Much Renters Insurance Do I Need?
You can determine how much coverage you need based on how much your personal property is worth. You may want to inventory your possessions to determine how much you’ll need. Some insurances will require this, so doing it beforehand saves you a step when applying for insurance.
If you have a lot of valuable jewelry, art, or equipment, you might want to consider an add-on policy or a rider that will protect these items. A standard renters insurance policy is enough for most people and will provide adequate coverage for a fair price.
According to the Insurance Information Institute, the average price for renters insurance in 2019 was $174 for the entire year. When you consider the peace of mind you get by covering your possessions, it’s an affordable price. Even though it’s not required, there is a lot of value in having a renters insurance policy.
Do I Need Renter’s Insurance If I Don’t Own Much?
Renters insurance is great if your property is damaged. However, it’s not just for recovering losses. Renter’s insurance adds extra coverage that protects you from lawsuits and financial liability if you or your pet accidentally injures someone or damages their property.
Another nice feature is that if there is a fire or other natural disaster and you cannot live in your apartment for a while, renters insurance will help with your temporary housing costs.
How Much Personal Property Coverage Do I Need?
How much coverage you get for your property depends on the value of your possessions. Taking a quick inventory of your belongings and then calculating what it would cost to replace them can give you a good idea of how much coverage you need. A typical amount is $30,000, which is suitable for many renters, but if you have valuable possessions, it’s a good idea to go above and beyond.
How Much Personal Liability Coverage Do I Need?
A standard renters insurance policy offers $100,000 in liability coverage. This amount is enough for many people, but your lifestyle and situation are unique, and you may feel that more is better. If this doesn’t seem enough, you might want to consider an amount equal to your assets.