The question ‘do I need renters insurance’ has been asked quite a number of times. One of the best answers to give is to state the obvious benefits of getting renters insurance which will be highlighted in this article.
As a tenant, your landlord’s insurance doesn’t cover your properties or anything in your rented apartment as it won’t pay to replace your belongings if a storm destroys the building or a thief breaks into your apartment. If you want coverage for these and many other disasters, you’ll need a renters insurance policy.
In this article, we’ll give you detailed reasons why you need renters insurance.
Table of contents
What Is Renters Insurance?
Renters insurance is a type of homeowners insurance, known as HO-4, that protects renters from a fire, storm, theft, or damage to personal properties. Your landlord has insurance that covers the building and structure, but your belongings inside the rental unit are your responsibility.
According to valuepenguin, renters insurance protects tenants from the costs of unprotected personal property damage or theft and legal liability.
Unlike car insurance, renters insurance is not required by state law. In fact, only 37% of renters had renters insurance, according to the Insurance Information Institute.
Just like home insurance, a tenant’s insurance policy will typically be multi-faceted. Offering liability coverage, protection for your belongings, and even additional living expenses if your rental should become temporarily unlivable.
For instance, if a visitor slips and falls in your apartment and decides to sue you for their injury, your renter’s insurance policy would protect you from liability. Liability coverage would also help to cover any damage to the building caused by you or your guests.
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Is It Worth To Have Renters Insurance?
Renters insurance is worth buying because it will shield you against unexpected accidents for an affordable price. With a renters insurance policy, you are paying a reasonable cost now — around $16 a month on average — to protect yourself from large and unpredictable costs in the future.
The benefits of having renters insurance come from its varied coverage, which ensures you against the following.
- Personal property damage: According to different major insurers, the average renter owns goods worth $20,000 to $30,000. If your personal property is stolen or destroyed as a result of a covered danger, such as a fire, renters insurance will pay the loss up to the limits you specify.
- Personal liability: Renters insurance covers the costs if you’re held liable for bodily injury or property damage.
- Additional living expenses: If your rental home or apartment becomes uninhabitable due to a covered peril, a renters insurance policy will cover you for costs above your normal expenses. This ensures your budget will stay the same even as you temporarily live elsewhere.
- Medical expenses: This feature covers medical costs for guests injured on your property, usually up to a limit of several thousand dollars.
All of these features give coverage that considerably surpasses the annual premium you will pay. A typical renters insurance policy, for example, will cover $30,000 in personal property damage and $100,000 in liability costs, with these limitations adjustable based on your needs. As a result, your coverage levels are far greater than the average renters’ insurance policy, which costs around $190 per year.
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Do I Need Tenants Insurance?
Also known as tenants insurance or an HO-4 policy, renters insurance covers many of the same scenarios — such as fire and theft — but it’s much cheaper because it only includes what’s inside your home and not the structure itself.
A renters insurance policy can also help tenants who are unprepared for a disaster that renders their home uninhabitable. In the event your apartment or home is deemed uninhabitable due to a covered event like smoke damage, for example — you would be stuck paying out of pocket for any living expenses exceeding their typical spending levels if they didn’t have renters insurance. With renters insurance you will have a loss of use coverage, which covers the costs of living exceeding your normal expenses — such as hotel stay, food, and special transportation — you need to continue to live until you return home or find a new permanent residence.
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What Does Renters Insurance Protect?
Renters insurance is coverage for people who rent the place where they live. This type of insurance protects against the loss of personal belongings like;
- Clothing
- Furniture
- A television or entertainment system
- A computer
- Musical or sporting equipment
- Jewelry
How Much Is Renters Insurance?
The average cost of renters insurance is around $15 a month, or $180 yearly. Some factors that go into deciding your premium are the amount of coverage you want, where you live if you own a pet, and your credit score. If you already have existing auto insurance, you may get discounts from your provider for bundling your renters and auto insurance.
If you happen to live in an area prone to disasters like floods, hurricanes, tornadoes, wildfires, mudslides, and earthquakes, you may have to pay the premium price because they are not included in the basic coverage.
How Much Renters Insurance Do I Need?
Your renters’ insurance premium is based on the amount of money it would take to replace your belongings. As a matter of fact, renters insurance policies cover up to a certain amount, usually around $20,000 or $30,000 worth of coverage. Determining the value of your belongings will help you decide how much coverage to get.
How To Get Renters Insurance
Just like car insurance, renters insurance prices can vary by state. Where you live will play a big role in your quote, and each company will consider that differently.
To be sure that you’re getting the best price for your renter’s insurance coverage, you’ll want to shop online and get quotes from several different insurers. Compare the quotes, and look for the most coverage types and limits. Then, look for the lowest premiums that fit your budget. If you have auto insurance, consider bundling your renters and car insurance.
Here are a few steps to take in order to get your insurance:
Step 1 – Find out what’s covered in your renter’s insurance
What’s covered by renters insurance can generally be broken down into three main coverage types:
Personal property coverage: This comprises all those properties you have in your house ranging from furniture to jewelry. The coverage pays to repair or replace them when they are stolen or damaged by a problem covered by your policy.
Liability insurance: This caters to injuries or property damage to others when you’re legally responsible. For instance, liability insurance pays for medical bills if a guest injures themselves in your apartment. Liability insurance also compensates for a legal defense in case you are sued because of an accident.
Additional living expenses (ALE): Sometimes called “loss of use,” ALE caters to expenses like hotel bills, restaurant meals, and services such as pet boarding or laundry if you can’t live in your home because of damage due to a problem covered by the policy.
Step 2 – Find out the coverage amount
The next step is to find out how much renters insurance you need. The best way to start this is by creating a home inventory.
A good home inventory will contain:
- A description of the item (or groups of items)
- Estimated value
- Purchase date
- Receipts and serial numbers (when possible)
You can use an app such as the National Association of Insurance Commissioners’ home inventory app (available in the App Store or Google Play).
Now that you have all of your stuff in a handy list, sum up the total estimated value, and you have a ballpark figure for how much personal property coverage you’ll need. A typical amount is $20,000 or $30,000, but you can buy more when needed.
Step 3 – Compare renters insurance prices
The best way to shop for renters insurance is to compare quotes from multiple insurance companies. You can get free quotes online or by phoning an independent insurance agent.
But don’t rely strictly on price. The best renters insurance companies combine competitive prices with good customer service.
What Is Not Protected Under Renters Insurance?
A renters insurance policy does not provide coverage for your belongings if they’re damaged under certain events. Generally, natural disasters such as earthquakes and flooding are excluded, however, specialized policies may be available for these events. There may be other events that aren’t covered under your policy. You should always review your policy documents and contract to be sure.
Specific limits of coverage available for items such as jewelry, art, and antiques may also apply. Make sure you select enough coverage to protect your items.
What Happens If I Don’t Have Renters Insurance?
Without renters insurance, you have no recourse for recovering what was lost. Your landlord will file a claim on his or her insurance policy and use the money to make repairs and renovations. However, this policy does not extend to your personal belongings in any way.
FAQs On Renters Insurance
Renters insurance is a type of homeowners insurance, known as HO-4, that protects renters from a fire, storm, theft, or damage of personal properties.
Renters insurance is worth buying because it will shield you against unexpected accidents for an affordable price.
Renters insurance is coverage for people who rent the place where they live. This type of insurance protects against the loss of personal belongings like; furniture, jewelry, television, computer, etc.
A renters insurance policy does not provide coverage for your belongings if they’re damaged under certain events.
Conclusion
With renters insurance, your rented apartment and the properties in it are protected against unforeseen circumstances like fire outbreaks, burglary, and theft. Be proactive!
References
- nerdwallet.com – What Is Renters Insurance, and What Does It Cover?
- guildhmsinsurance.ca – What Happens If I Don’t Have Renters Insurance?
- valuepenguin.com – Why Renters Insurance Is Worth It
- geico.com – What does renters insurance cover and how does it work?
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