Renters insurance is really one type of insurance that often gets overlooked. Most people who are renting an apartment forget that this coverage is really important to have. They often assume that if their apartment building or rental house burns down or the roof blows off during a storm, that the landlord’s insurance will pay for the damage.
Wrong….
Who pays for the damage to your property?
That answer is YOU if you don’t have a renter’s insurance policy.
What Is Renters Insurance?
Basically speaking, this insurance policy covers the contents of your apartment or rental home from damage or loss. It also provides liability insurance in the event someone gets hurt while in your rental. It does not cover the actual building that you live in because it is actually owned by someone else (and they would have a homeowners policy to cover themselves).
Also, in the event that your rental is so damaged from something that is a covered loss, the policy will provide you with temporary housing as well as meals. While your property is being repaired, the renters insurance policy would potentially cover a hotel, food, and other normal living expenses associated with the loss of a place to live.
Ever thought of what it would look like to live with your in-laws for a while? Likely not pretty and the small premium associated with a renters insurance policy will give you piece of mind that in the event of an emergency, you have the insurance as backup.
What Does Renters Insurance Cover?
Coverage includes all of your personal belongings in your rental including:
- Clothing
- Small appliances
- Furniture
- Toys
- Dishes
- Television
- Bedding
- Jewelry
Of course this list isn’t meant to be all-inclusive. The way you should look at a renters insurance policy is this:
“What is the value of EVERYTHING in your apartment?”
“What would it cost to replace ALL of your ‘stuff’?”
When you think of the answers to those questions you quickly realize the true value of placing coverage on your property as a renter. You should know that if you have things that are truly valuable, like a jewelry collection, fine art, etc., that you need to buy additional supplemental insurance for those things. Why? Because renters insurance does have policy limitations. So if you want the true value for that Van Gogh you’ve been hanging on to, you will want to insure that through a separate policy based on its real value.
Another important part of a renters insurance policy is that it will cover against liability claims. Have a guest in your home that gets injured and then sues you? Have a dog that bites someone while visiting your apartment? These would likely be covered by any renters policy (up to policy maximums of course).
Finally, a renters policy will also cover you against theft of your property. This includes whether the theft occurs in the home or outside of it.
What Isn’t Covered By Renters Insurance?
You need to understand that all renters insurance policies have exclusions that will come into play. Here is a list of things that likely aren’t covered by most policies:
- Damage to your belongings during a flood (like a natural disaster)
- Loss of your items due to an earthquake
- A roommates belongings (they need their own policy)
- Any intentional damage you cause
It is important to review your policy carefully. For instance, while natural disaster floods are likely not covered, water damage due to a broken pipe likely is. The key here is to review your policy exclusions very carefully to ensure that your items are protected properly.
How Much Does Renters Insurance Cost?
Although renters insurance is an added monthly cost, it should be viewed as a necessity if you are renting. Most policies range from $150 to $200 per year depending on where you live as well as other factors. One of the key cost drivers of the policy is your deductible amount. The lower the deductible the higher the monthly premium paid and vice versa. The difference between a $500 deductible and a $1000 deductible might make a big difference in the premiums.
Also, the policy limitations will play a role in the cost of your policy. Want a $100,000 liability limitation versus a $50,000? The premium is going to be higher.
The State you live in also plays a role in the monthly premium. There are States that have higher premiums like in the South (Mississippi or Louisiana) and other States will be lower (North Dakota or South Dakota).
When you look at the value of your items, and imagine all the things that could go wrong, you quickly realize that this is a very cost-effective insurance policy to own – regardless of the monthly cost. Paying $200 a year for a policy versus replacing all of your clothes and other items is a no-brainer financially speaking.
What Companies Provide This Type Of Insurance?
Most major insurance carriers will offer a renters insurance option. Some examples include:
- Geico
- Liberty Mutual
- Allstate
- Farmers Insurance
- State Farm
- Nationwide Insurance
- Progressive
These are all very large companies and you won’t go wrong buying a policy with any of them. However, regardless of which company you choose, be sure to understand what your policy includes and excludes. If you don’t understand the policy be sure to ask until all of your questions are answered.
Who Needs Renters Insurance?
The answer to this questions is likely “anyone who is renting a home or an apartment.” Obviously our needs are different at an stage of our life. However, we all have the need to protect ourselves so if you are a college student all the way through a grandparent, you likely need to protect yourself with a policy. At any point in your life losing your belongings to a fire, or having them stolen is not a place you want to be. Further, getting sued by a guest in your home isn’t fun either. It just makes good sense to protect yourself and your belongings with proper insurance coverage.
Summary
If you rent the place that you are living in then by all means you need to look into getting a renters insurance policy. The risk is too great and the cost of the insurance is too small to gamble with your protection. Renters insurance is a small price to pay for a great sense of protection. Let’s face it – stuff happens. If it just so happens to your belongings while you are renting, you will want to be protected.
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