A Simple Guide to Choosing Renters Insurance

Posted by: TheGuarantors on June 1, 2021

Renting a property for the first time is a huge milestone for many young professionals. However, the joy of renting a property can easily turn to despair if an unfortunate event such as a fire, theft, or explosion damages your belongings and ends up costing you thousands of dollars. Renters insurance is a policy that helps cover and protect renters living in an apartment or a house from mishaps.

You may be wondering, why do renters need insurance when the landlord already has landlord's insurance? The landlord's insurance protects the building where you live. However, it won't cover your damaged possessions or pay for your expenses during the property's restoration.

 
Landlord Insurance Renters Insurance
Who should buy this?
The homeowner/landlord
The renter
Does it cover physical damage to my property?
Covers property damage
Doesn’t cover property damage
Who's belongings are covered?
Covers landlord’s belongings
Covers renter’s belongings
Are renter's losses covered?
Covers landlord’s belongings
Covers renter's losses
What will my insurance cover when my property gets damaged?
Covers lost rental income
Covers additional living expenses
What happens if my rent goes unpaid?
Guaranteed income coverage for landlords
Not a coverage in renters policy
What does it cost?
Costs $100 monthly
Costs $15 to $30 monthly

 

Getting renters insurance can help fast-track your rental application as many landlords require you to have a basic policy as the minimum leasing condition. It's also a good investment because these policies cover your personal belongings and unexpected events, such as if someone gets injured while at your apartment.

What Your Renters Insurance Covers

Renters insurance covers unexpected events in your apartment, house, or mobile home. The coverage includes three components: your personal belongings, liabilities, and additional living expenses.

Personal Belongings

Renters insurance covers the cost to restore or replace your possessions like furniture, electronics, clothing, etc. The insurance covers specific events like fire, theft, vandalism, explosions, windstorms, lightning, and other disasters listed in your policy.

The easiest way to calculate your insurance coverage is to make an inventory of your valued possessions and save the receipts from any big purchases. It will make your insurance claim faster and easier!

Liability

Liability coverage protects you against lawsuits for any injuries or property damages in which you, your family, or pets may be at fault. The policy will also cover medical expenses if a person gets injured inside your rented property.

In addition, the liability coverage in your renters insurance will cover the cost of your legal expenses up to the "policy limit," which may be as high as $300,000. However, experts recommend Umbrella insurance if you require higher coverage in your policy.

Additional Living Expenses

If your property gets damaged and becomes uninhabitable due to any of the events listed above, the insurance will reimburse you for additional living expenses. This ensures that you don’t have to pay out of pocket when you need temporary housing costs. Costs may include temporary rentals, hotel expenses, restaurant meals, and various other expenses. Your policy covers these until you move back to your repaired property.

What Your Renters Insurance Doesn’t Cover

Renters insurance doesn’t cover natural calamities like earthquakes, floods, and hurricanes. You may have to purchase additional or separate policies to cover these types of events, which can be expensive depending on where you live.

In addition, if you own expensive items such as high-tech electronics, antiques, and fine jewelry, you may need to purchase an additional policy to cover them as well.

Buying Renters Insurance

It’s a good idea to keep records and receipts of valuable or important purchases before buying renters insurance. It will give you an idea of the coverage you need in a policy. Make sure to keep this inventory list in a location where you can always find it, like saving it online in the cloud. It will make filing a claim much easier.

Now that you have figured how much coverage you need, you’ll have to look for insurance companies that offer policies in your state. Renters insurance is pretty affordable, capping at an average of $19 monthly but the rates do vary based on your policy, credit, and the state where you live.

Types of Renters Insurance Coverages

When you sign-up for your policy, the insurance company will provide you two options to claim insurance

Actual Cash Value

Actual cash value covers the cost of what each item was worth at the time of damage. Actual cash value policies are cheaper. However, you may not get the best returns as most electronics depreciate with time.

Replacement Cost

Replacement cost policies will pay you the total amount it costs to replace any damaged items. They are usually costlier, but they provide you the best bang for your buck!

In the end, purchasing renters insurance is a small price to pay for a lot of protection; it protects you against personal loss, the financial burden of unexpected catastrophes, and most of all, it gives you peace of mind.