Renter’s Insurance 101: What is it? And Why Do You Need It?
You’re renting a home and something catastrophic happens, damaging everything inside. Whether you caused it or some other hazard caused the event, can you replace your damaged belongings? Would you know how to pay for any losses incurred?
Renter’s insurance provides you with a tangible financial plan and sense of security if something terrible happens to your belongings or if you accidentally cause harm to others or their possessions. For a relatively inexpensive monthly payment, renter’s insurance can be customized to fit your needs. Additionally, in the rare instance it does not cover a possible catastrophic event or pricey possession, you may be able to purchase extra coverage for that eventuality or item.
Your basic renter’s insurance policy will cover personal property loss, temporary living expenses (sometimes called additional living expenses), and personal liability including medical bills. Policies vary from agency to agency and can be scaled to cover up to the value of your possessions. Be sure to examine a policy completely before purchasing to make sure you can recover all losses that you could possibly incur.
Personal Property Loss
If something were to happen to your rented home– whether it is an apartment, house, townhome, or condo– and things inside the dwelling were damaged as a result, your renter’s insurance will cover the cost of replacing those damaged items. Keep in mind as you are shopping, however, that most standard insurance policies do not cover damage caused by floods, earthquakes, mudslides, or nuclear catastrophes. Depending on where you live, you may want to explore additional policy coverage for these events. Certain types of renter’s insurance will only cover the cost of replacement up to a specific amount per item. If you have something of great value, consider including an amendment to your policy that specifically covers the full cost of that item. These amendments are usually very inexpensive.
Additional Living Expenses
Let’s say your house catches on fire or a tree limb lands on the roof during a storm, and it is no longer inhabitable. Your renter’s insurance will cover the cost of a hotel and, in certain cases, food or additional travel expenses you may incur as a result of the incident. Depending on how long you have to be out of your dwelling, or if you have to relocate, this coverage could save you lots of money, not to mention relieve a great deal of stress during a stressful situation.
Personal Liability
Your renter’s insurance policy will cover property damage or bodily injury that happens as a result of something you did (unintentionally, of course). If your tub overflows because you forgot to shut off the water, or if you left a candle burning and it caught on fire and damaged the adjacent dwelling, your policy will cover the costs of that damage to others or their belongings. Accidents do happen, so this is an important safety net.
Worthwhile Investment
A common misconception is that the owner’s insurance policy on the dwelling will cover all costs related to incidental hazards or other damage. Unfortunately, an owner’s home or dwelling insurance policy will only cover the structure and any owned appliances within. Everything else, from furniture to fancies, is on your dime. While some landlords will require you to have renter’s insurance and will often stipulate the amount of personal liability coverage, some do not require it. Still, it is a good idea to get the right coverage for your lifestyle.
It’s also important to consider that your renter’s insurance policy will not cover your roommate’s costs, and vice versa, unless that roommate is related by blood or law, including marriage. You must both have your own renter’s insurance if you expect to cover the costs of replacement if something happens.
Renter’s insurance starts as low as $5 a month and averages around $15 a month. For the amount of protection it provides, it really is a worthwhile and inexpensive investment in your livelihood.