As Majdas Touch Insurance explains, Renters Insurance is a form of Homeowners insurance that offers coverage to people who need protection on their personal belongings but do not own the place they reside. They could be living with family, renting, or subletting a house, apartment, condo, townhouse, etc.
In general, Renters Insurance offers protection against losses to your personal properties, including clothes, electronics, jewelry, furniture & other belongings.
It also offers liability protection, which is protection against lawsuits for anything you can be held liable for. For example, damage done by tenants, their family members, and pets. If your dog bit someone, if someone fell at your apartment while visiting you, or if you have a dinner party and serve alcohol where the person who was drinking gets into a car accident while driving home from your house, you are responsible for that, and Renters Insurance will cover you. Another way liability protects you is if you are riding a bike and accidentally run someone over or rent jet skis while on vacation and cause damage to them – your liability under your Renters Insurance will cover you.
Renters insurance also covers if you damage the place you live; let’s say your candle causes a fire outbreak in the home or if you accidentally left the water running in the bathtub and it overflows, causing damage to the unit down below, there’s coverage. If you damage something owned by someone else, like their jewelry or laptop, your liability from your Renters Insurance Policy will cover you. There’s also Medical Payments coverage which will pay no matter who’s at fault for an injury, while liability insurance is triggered if you’re found responsible.
Renters Insurance offers additional living expenses (ALE) coverage if your home becomes uninhabitable due to circumstances covered by your policy. This coverage generally pays for extra living expenses during home repairs. It provides financial protection against an insured disaster that makes it necessary to live somewhere else temporarily. The coverage will pay for hotel bills, temporary rentals, restaurant meals, and other living expenses while a rental home is being repaired or rebuilt.
Renters insurance may also protect your belongings anywhere in the world. If you are traveling and your luggage or laptop gets stolen out of your car or lost in transit – you are covered. It also covers theft from your storage.
With Renters Insurance policies, there is a deductible involved that represents the dollar amount you pay for repairs or replacements. Most Renters Insurance deductibles are around $500 - $1000. You pay the first $500-$1000 of damage, and the insurance company will settle with the rest.
Having Renters insurance is also very beneficial if you plan to purchase a home down the line. Renters Insurance gives you a prior owner’s credit towards a Homeowners Insurance Policy. It offers you a better rate on your Homeowners Policy when you’re ready to buy a home. Homeowners insurance is a requirement by the mortgage company if you finance a home.
Renters Insurance is for replacement cost. If you buy a TV today for $1000 and someone steals it, your Renters Insurance covers that under theft coverage, but they don’t reimburse you in the dollar amount you spent on it. Instead, they replace the item with a like item or the next best model on the market today. That means if you go to buy that same TV 6 months after purchasing it and it now sells for $400, they will only give you $400 to replace that TV because it is a replacement cost, not a reimbursement cost. If that same TV is no longer available on the market, they will give you money to buy the newest version of that model.
Every insurance policy has exclusions, and Renters Insurance is no exception. Most Renters insurance won’t cover damage from flooding, so you’ll have to pay for repairs yourself or purchase separate flood insurance if your home is at risk. Another instance is earthquakes, but again you can buy earthquake insurance separately or as an endorsement or rider to your Renters policy. Most Renters Insurance won’t cover bed bugs, mice, or other unpleasant infestations. However, you may be able to get bed bug coverage with a standalone policy through a high-risk company.
Most Renters Insurance will not cover your roommate’s possessions unless the two of you share a policy, listing each person as a named insured, which not all states or insurance companies allow.
The amount of Renters Insurance coverage you need depends on how much stuff you have and what your savings and other assets are worth. The more you could potentially lose in the event of an accident, the more insurance you need.
When buying renters insurance, first take stock of your belongings to decide how much personal property coverage you need.
Although Renters Insurance is not a requirement by law, a growing number of landlords mandate tenants to purchase their Renters Insurance policies, and they’ll expect to see proof.