What is Renters Insurance and why is it important?
If your belongings are ever damaged or stolen or you’re facing a lawsuit or additional living expenses due to an act of god, Renters Insurance may save you from an enormous financial burden.
Most people are familiar with home insurance. Less familiar is Renters Insurance (also known as Tenant Insurance) which protects you if you’re renting a residence. Renters Insurance may be a requirement for some landlord-tenant lease agreements, but even if it’s not, it’s a good idea to have.
Although landlords likely have insurance of their own. Your landlord’s insurance typically only covers the building. This leaves your contents within the building unprotected. Further, if you were found liable for damages to the building, your landlord’s insurance company may come after you for the costs. Renters Insurance can aid you in both of these situations. Further, it can cover certain expenses that arise from an emergency.
What Renters Insurance covers
Insure your belongings from theft or disaster
Renters Insurance can protect your valuables, such as laptops or jewelry from theft or damage. More importantly, insurance can provide peace of mind if something happen to your watch collection or DSLR camera. Policies usually cover break-ins, floods, fires, etcetera, and compensate you with an amount to repurchase or repair your property.
Renters may think that they don’t own enough belongings for this type of insurance to be worth its cost. However, a good idea is to take inventory of your belongings and how much it would cost to replace everything. You may be surprised. Insureds can also choose how much personal property coverage they need as part of their policy. So if you have limited valuable belongings, you can opt for a lower amount of coverage but maintain the other benefits of Renters Insurance.
Protect yourself from personal liability
If you leave the stove on and accidentally start a fire or leave the water running and damage the floors and walls, the landlord or their insurance company may sue you. If you don’t have insurance to protect yourself, you may end up with a massive bill to foot. This is where the personal liability protection portion of renters’ insurance comes in. Tenant insurance generally protects against anyone suing you for damages up to a certain amount (determined by the policy you’ve purchased).
Liability protection could also save you from out-of-pocket costs if you were responsible for someone’s injury while they were at your residence. A slip or fall could result in a personal injury lawsuit to claim medical expenses or lost wages against you. Renters’ insurance can again protect you from paying these damages yourself.
Cover additional living expenses in an emergency
Various situations could make your residence uninhabitable. A fire could ravage your building, or a car may run through the face of your house. Landlord insurance would protect your landlord with rental income replacement and repairs cost, but you’ll likely need a temporary living arrangement until you can find a new place. This could mean an expensive hotel or AirBnB.
Renters Insurance can cover additional living expenses as a result of unfortunate situations. It can pay for hotel and reasonable additional food costs when you’re forced to leave your home.
What to look out for in a Renters Insurance policy
Although Renters Insurance covers many situations, there are a few things to look out for before you commit to a policy:
- Coverage Limits: The maximum amount covered due to lost or damaged belongings, personal liability, or additional living expenses.
- Deductible: The amount you would have to pay if you make a claim.
- Scope of Policy: Renters Insurance doesn’t cover everything. For example, if you run a business from your rented residence and you’re sued due to something related to your business, the personal liability portion of your policy likely won’t cover it.
Determining the cost or coverage of the three factors above can determine the price of your policy. For example, a larger coverage limit commonly leads to a higher monthly cost for your insurance policy. Other factors that could affect the cost of your policy include
- The city you live in
- The type of building you live in
- The insurance company
- Your insurance history
Renters Insurance may seem like another cost you don’t want to pay for when rent, condo fees, and other dues are on the horizon. But having Renters Insurance protects you from the worst-case scenario. In reality, the best case is that you’ll never have to use the policy. But if your belongings are ever damaged or stolen or you’re facing a lawsuit or additional living expenses due to an act of god, Renters Insurance may save you from an enormous financial burden.
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