Renters often overlook or underestimate their need for insurance based on the belief that their personal possessions are not that significant. Therefore, since the property that they are renting is likely covered by the property owner, they assume there is simply no need for them to purchase renter’s insurance on their own. Unfortunately, when renters fail to cover their own possessions through renter’s insurance or to protect themselves in the event of an accident, they are playing a dangerous game of chance, one that they very easily could lose. Read on to learn more about renter’s insurance, what it covers and why it should be an important consideration for all renters:
What is Renter’s Insurance?
Renter’s insurance is a policy written to protect your personal belongings which are damaged or destroyed due to a covered event. The Renter’s Policy also includes Personal Liability coverage, is you are being held liable for injuries to another party. Your Liability coverage is not limited to your premises, it follows you wherever you go; the policy covers injuries to another party caused by a pet or member of your household. This coverage includes legal defense expenses due to a lawsuit.
The owner of the home or apartment building is responsible to replace/repair damages to the building. However, the owner/landlord’s insurance policy does NOT cover damages to the tenant’s personal property. This is many times misunderstood by the consumer, consequently, causing hardship when the tenant’s belongings are destroyed or damaged.
What Does Renter’s Insurance Cover?
The following is a breakdown of the type of coverage that often comes with a renter’s insurance policy, though you will need to check with your agent to determine exactly what your policy covers:
Personal Property
A renter’s policy covers your personal property against loss from a covered peril. In most cases, this includes coverage against damage from fire, lightning, smoke, wind, hail, explosion, riot or civil commotion, aircraft, vehicles vandalism, theft, volcanic eruption, falling objects, the weight of ice and snow, and accidental discharge or overflow of water from within plumbing or related system. It’s important to note that the renter’s policy does not cover flood damage.
The standard renter’s policy covers personal property on an ACV basis, meaning that the carrier will pay for the replacement of your personal property less depreciation for wear and tear. However, the policy can be endorsed to include full replacement Costs. When purchasing a renters policy, make sure you ask the agent to endorse the policy for full Replacement Cost… therefore, in the event of a loss, the carrier will replace your personal property up to the policy limits, minus the policy deductible.
Liability
Liability coverage provides coverage for bodily injury and property damage for the policyholder due to an accident. The coverage amount is limited to the amount described on the policy. Obviously, you never expect an accident to take place. However, as is the definition of an accident, it is not planned. It can wreak havoc on your carefully orchestrated finances to have to fund the medical expenses of someone or to fight against a lawsuit. Just one accident can easily spell the end of your financial security, therefore, liability coverage is immensely important. Make sure that your coverage limits fit your needs.
Additional Living Expenses
Renter’s policies can include a provision that provides coverage for additional living expenses for you as the renter. This is applicable if you are unable to live in your apartment due to a covered peril, like fire. The policy does have a limit of coverage, but normally the limit is an adequate amount to pay for extra expenses until the policyholder can find a new place to live. This is an extremely helpful type of coverage in that it will keep you from incurring additional expenses as your space is either being restored or repaired. You don’t want to have to scramble to pay for an additional space after having endured some sort of issue that displaced you in the first place.
What Renter’s Insurance Will Not Cover
Just as every other insurance policy has its limitations, renter’s insurance also has some factors that are not covered under the typical policy. Read on to learn more specifics on what will likely remain uncovered under such a policy:
- Bed Bugs and Pests: There is likely nothing worse than realizing the space you call home is infested. Unfortunately, the cost of fighting against bed bugs, which is the nation’s number one bug problem, is not covered under most renter’s policies. Thankfully, dealing with such an issue shouldn’t be your responsibility as this type of issue usually falls to the property owner. Therefore, it isn’t a problem you should have to worry about covering anyway.
- Earthquake and Flood Damage: Another common element that isn’t covered under the renter’s insurance is earthquake and flood damage. While many natural disasters are covered, these two specific incidents are usually an exception. If you live in a flood or earthquake-prone area, you can ask about additional coverage you can add to a policy for protection against these factors. Your insurer will be able to advise you on the steps you should take.
- Car Theft or Damage: Renter’s insurance policies typically don’t include car theft or damage to the renter’s vehicles. Thankfully, your personal auto insurance policy can ensure that your vehicle is protected.
- Roommate Property: Your renter’s insurance policy will not cover your roommate’s possessions or property. They will need to get their own policy to ensure they are protected against loss or lawsuits. If you are living with a roommate or domestic partner, inquire about how the policy can cover both parties as state regulations and insurance policies vary.
How Does Renter’s Insurance Coverage Work?
In exchange for the protection renter’s insurance provides, you’ll make monthly or yearly payments, which are known in the industry as your premium, to your insurance company. Your premium will depend on a range of factors, such as where you live, the amount of coverage you choose to purchase, your personal claims history, and more.
Renter’s Insurance is a Good Idea
Renter’s insurance overall is quite inexpensive, and due to the coverage it provides, a great idea for all renters. If you are currently unsure as to whether you would benefit from a renter’s policy, contact us at Winter-Dent to learn more about how this coverage could prove invaluable to you as a renter. The low cost of protection may make a smart decision easier.