All You Need To Know About Renters Insurance

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All You Need To Know About Renters Insurance

It is understood; the landlord’s insurance provides cover for the cost of repairing a building that got damaged from fire or other disasters. This is where you should consider renters insurance. Although not all landlord requires their tenants to purchase renters insurance, however, most of the landlords add it to the lease requirements. 

Whether renters insurance is a requirement for your lease agreement or you just feel the need to acquire it, there are definitely some questions you would like find answers to. 

To provide security for your belongings such as clothes, appliances, furniture, and so on, you need renters insurance. Without renters insurance, all the belongings you’ve gathered over the years with your hard-earned money could be lost to burglars, water, or fire disaster. 

If you are to think about the security of your valuable items, having renters insurance in place is nonnegotiable. However, knowing your options when you are considering renters’ insurance as well as conducting proper research is very important. We have compiled for you all you need to know about renters insurance. Enjoy!

What is Renter’s Insurance?

This type of insurance policy provides coverage to your personal belongings from theft or damage. Your landlord is certainly not responsible for any loss of personal belongings when for instance, someone burgled your rental home and cart away any of your items (except there is evidence that they breached landlord-tenant agreement). 

However, the cost of replacing the belongings will be covered by renters insurance. Any form of damage to your personal items such as water, fire, and so on is also covered by renters insurance. 

Renter insurance which is also known as tenants insurance is a monthly insurance policy that provides you coverage while you live in a rental property. It can also be seen as a small-sized homeowner’s insurance, which offers you the protection that minimizes your liability when an unwanted event such as theft, natural disasters, and guest injuries occurs. 

However, renters insurance doesn’t provide cover for the apartment itself, unlike homeowners insurance, meaning that the landlord is still responsible for the structural coverage.     

What are the Things Covered by Renters Insurance?

All the items that can be found in your apartment are covered by renters insurance, including personal liabilities such as guest injuries caused by you in your home. Expenses from a temporary move due to disasters such as fire or water in your rental home are also covered by renters insurance. 

We gathered the list of situations that renters insurance is applicable to instead of listing out the items covered by renters insurance, as there are differences between damages. You are reimbursed by a standard renters insurance called HO-4 policy for the loss or damage that comes to your items from 16 certain events which include:  

  • Theft
  • Riot or civil unrest
  • Damage by aircraft
  • Windstorm or hail
  • Explosion
  • Damage by vehicles
  • Vandalism or malicious mischief
  • Smoke 
  • Volcanic eruption
  • Fire or lightning
  • A falling object
  • The weight of ice or snow 
  • Unexpected overflow of water or steam from air conditioning, plumbing, auto fire protective sprinkler system, heating, or from any appliance in your home.
  • Unexpected damage from the electric current that is generated from an artificial source (excluding loss to a transistor, tube, or other electronic parts).   
  • Unexpected cracking, breaking apart or burning of an air conditioning system, hot water heating system, or an auto fire-protective system.
  • Freezing of air conditioning, auto fire-protective system, plumbing, or any appliance in your home. 

What are the Things not Covered by Renters Insurance?

It is also important to know the things that are not covered by renters insurance. Just like homeowners insurance, both floods and earthquakes are not listed among what is covered by renters insurance.

Pro Tip

It is important to find out if the two natural disasters can affect where you planned to rent an apartment and also to purchase separate insurance policies to provide coverage.

You, as a renter, can get flood insurance from many private insurance providers, including the National Flood Insurance Program (NFIP). The same company that sold your primary renters’ insurance coverage to you can also provide you with earthquake insurance as add-ons.    

Other Valuable Protections

Although people generally believe that renters insurance only provides coverage to personal belongings, however, there are additional protections included, which is beneficial to you. Such include: 

  • Liability insurance: You could get your finances ruined for many years if your negligence caused someone to get injured in your home, and they filed a lawsuit. The liability part that comes with your renters’ insurance provides you coverage in this kind of situation (being sued for property damage or bodily injury). Any accidental damage from either you or your family to others is also covered. You can also be protected from libel and slander under an umbrella liability policy even though it will cost you more. Immediately you reach the limit on your liability coverage; the umbrella will take over. 

You are also covered under this liability in case your dog bites a neighbor, visitor, or stranger either on or off your property. If you own a dog, make sure you check with your renters’ insurance provider to see if they include this in their coverage because some insurers do not have it on their list. 

The cost of legal representation in case of a lawsuit as well as any damages done to the other party is generally covered under the renters’ insurance policy. Liability limits generally begin from $100,000 up to $500,000; although some insurance minimum of $300,000.

The no-fault medical coverage is also included in liability protection. This, as stated by the Insurance Information Institute, will allow anyone injured on your property to easily tender their medical bills to your insurance provider so they can pay the bills for them without filing a lawsuit.

  • Additional living expenses: Your additional living expenses will be paid for by your renter insurance in the event where your home got destroyed in any of the listed disaster covered by your insurance policy. Expenses such as restaurants meal, hotel bills, and the rest will be paid for while your home is being repaired. 

Cost of Home Renters Insurance

Cost of Home Renters Insurance

Renters insurance usually comes at a pocket-friendly cost. The average cost of the policy is $15 monthly, and the reputable policies can be purchased for half of that. The National Association of Insurance Commissioners reported that the annual cost of renters insurance is between $114 and $262. 

However, the total cost of your renter’s insurance can be affected by many factors. Such factors include the location where you are renting (your state and neighborhood) as well as the size and type of the home you are renting. It is generally important to conduct proper research and get renters insurance quotes from different providers to make sure you are getting the best deal.  But how does renters insurance pay you in case of any damage or loss?

Cash Value vs. Replacement Cost Value

Cash value payouts and replacement cost value payouts are the two significant ways in which renters insurance can pay you. 

  • Cash Value Payouts:  Cash value payouts reimburse you with the exact cost value of a certain item. Kindly note that, when determining the value of the item, depreciation is always considered. For instance, a 5-year-old washer, regardless of how high the cost was when purchased, will not be valued the same as a new washer during evaluation.  
  • Replacement Cost Value Payouts: On the other hand, replacement cost value payouts reimburse you with new items with the same specification to the lost or damaged item. This implies that you will not be given cash for the 5-year-old washer, but instead get a repair or a new washer with the same specification. Contact your insurance provider to know more about their specific payouts options. They will either give you options or restrain you to one.

How Reimbursement Works

There are two types of reimbursement options for renters insurance policies offered by insurance providers: 

  • Replacement cost policies: This will pay for the exact cost of replacing your items. For instance, if your washer is lost, you will be reimbursed the actual cost of getting a new, similar washer. 
  • Actual cash value policies: This will pay for your items at the current value when the loss occurs. This means that depreciation will be considered. For instance, you will be paid an amount that would let you buy a 5-year-old washer to replace the loss 5-year-old washer. You will be responsible for the difference if you want a new washer. The insurance information institute state that replacement cost coverage is expensive compared to actual cash value coverage. It is up to 10% higher than the actual cash value in most cases. 

Pro Tip

It is advisable to go for the replacement cost policy if you would prefer brand new items as a replacement to the lost ones. There may be a need for special insurance for some special items using a rider. For instance, the highest amount paid by renters’ insurance providers for jewelry theft is $1,500, while it pays lesser for items like firearms, furs, watches, and silverware. In the event where you have a highly valuable diamond ring, it is important to talk to your insurance agent to know if you will need a rider for full value protection. 

Additional Information to Know about Renters Insurance

Discounts and other Saving Methods

You may be offered discounts by most insurance providers if your renters and auto insurance policy are with them or if you have a security system, deadbolt locks, or smoke detectors in your home. You can also consider raising your deductibles to save money as well. Your deductible is the amount that will be removed from your insurance claim check in case of property loss. 

For instance, if your deductible is $1,000 and you have a $5,000 claim in property damage, then your insurance check will be $4,000. Your deductibles will affect your rates (higher deductible equals cheaper rates). 

Note that you will be required to pay the deductible every time you file a claim for property loss. Before you decide on your deductible amount, be sure to figure out the amount you can pay from your purse in case there is a disaster. You are not to pay any deductible on liability claims filed against you.     

Renters Insurance and Storage

There are renters’ insurance policies that provide coverage for your items while in storage, and this coverage type is called “off-premises coverage.” The reimbursement limit, in this case, is mostly lower in that of items in your home, and there may also be a limit to the time your items in storage are covered (maybe the first 30 days of your move). 

Renters Insurance and Moving

There will be no coverage on your moving cost from renters insurance; however, if your policy starts before your exact relocation day, then it will provide coverage for your items while in transit- to a certain level. 

You will not be able to file a claim if your entire dish breaks while moving, but you will be able to do so if it was stolen from the moving truck. This is one of the reasons you should opt for reliable professional movers or rental truck services. There are still also moving insurance companies.

Renters Insurance can Provide Coverage for your Items Outside your Home

You definitely know that any renters’ insurance package you opt for certainly provides coverage for your personal belongings. You will be duly reimbursed either by replacement cost (cost of getting a brand new) or actual cash value (worth as at the time of damage/loss) based on your coverage in the event of damage or loss of belongings. 

In some cases, renters insurance also provides coverage for your belongings even away from your home. You may still be reimbursed if your bicycle got stolen from the bike rack or your laptop is stolen from the hotel room that you are logged in. 

Renters Insurance and Pets

Damage from pets is not listed among the things covered by renters insurance. This implies that you will be responsible for fixing the scratches left on the door frames of your apartment by your cat. 

Some renters’ insurance providers offer coverage for pet-related damages to other people’s property when they are in your home. It is not certain that your policy will provide coverage on pet-related injuries such as car scratches as they are not listed under the list of things covered by homeowners insurance and renters insurance as well. 

Who needs Renters Insurance?

Who needs Renters Insurance?

Renters insurance is a requirement for lease agreement by some landlord in some cases. They may give you the grace of purchasing it within a given period. Mostly, it’s your decision. 

Although, renters insurance is not mandatory; however, you should consider the cost of replacing your belongings in the event of loss, theft, or damage before you decide whether to purchase it or not. If the only items you have as possession do not exceed a toothbrush, a futon, and a coffee maker, then you probably don’t need renters insurance. 

FAQ about Renters Insurance

Although you are familiar with what renters insurance is all about, you may still have some questions to ask about protection as a renter; you will find answers to some questions below: 

How many renters insurances should I purchase?

Be sure to purchase coverage that will replace all your belongings in the event of theft, water, fire, or other covered disasters. The best way to figure out the total valuation of your belongings is to create an inventory of your items together with their estimated value.

Should I go for actual cash value or replacement cost coverage?

Depreciation is considered in actual cash value coverage. Although the replacement cost coverage is expensive, however, it is worth the extra cost as you will be reimbursed for the actual value of the item.

What disasters are/are not covered?

Coverage is provided for you in renters insurance against any losses from an explosion, smoke, vandalism, fire, windstorm, theft, lightning, and certain damages from water such as a burst pipe or floods in your apartment as a result of overflown neighbor’s bathtub. Similar to standard homeowners insurance, the majority of renters insurance doesn’t provide coverage for floods or earthquakes. 

You can get flood insurance coverage from private providers and the National Flood Insurance Program. You can also get earthquake insurance separately or as additional coverage to your renters’ insurance, depending on your location.

What is my deductible, and how does deductible work?

Any money you are responsible for paying before your policy coverage is known as a deductible. For instance, if your deductible is $1,000 and a property worth $6,000 got destroyed by fire, then you will be responsible for the first $1,000 while your insurance provider covers the remaining $5,000. 

You will find renters insurance deductibles written in dollars amount on the declaration page of your insurance. Generally, the higher your deductible, the lower your policy premium!

What is a floater, and is it necessary I get one?

A floater is another policy that provides more cover for highly-expensive items in case they are lost or stolen. You can add a floater to your insurance policy if you have expensive jewelry, musical instruments, sports equipment, furs, and the rest to protect them against loss or damage. 

Am I covered if I am away from home?

The off-premises coverage included in most renters insurance provides coverage for your belongings against any of the listed disasters even when you are away from your home. For instance, your laptop stolen from your car would be protected under this. 

What is liability insurance?

Liability protection is also available with renters insurance, and it provides you coverage against a lawsuit for property damage or bodily injury caused by you, your family, or your pets to others. This coverage pays up to the limit of your insurance policy, so you don’t have to defend yourself in court. 

The no-fault medical coverage should also be included in your renters’ insurance as it makes it easier for anyone injured on your property to submit their medical bills directly to your insurance company for payment, to avoid being sued.   

Is my liability policy enough?

Be sure to see that the amount of liability coverage provided by your insurance is enough to protect your financial and other necessary assets in case there is a lawsuit. 

Is the umbrella liability policy necessary?

Umbrella liability policy is worth considering if you require huge liability protection. It will start its work immediately; your standard liability coverage reaches its limit. An umbrella liability policy will also protect you against libel and slander. 

Getting Renters Insurance

The first step to take in getting renters insurance is to determine the type of coverage you need as well as the amount of coverage required. Create an inventory list of all your belongings that will be staying with you. The number of belongings will determine the amount of coverage. 

Then research renters’ insurance companies and choose the best for your needs. You may either consider a standard insurance company or those that offer renters insurance. Top renters insurance companies will be discussed in one of our subsequent posts.

Final Thoughts

The best movie ever is to get different quotes from different renters’ insurance providers. Make sure you consider the premium, deductibles, and coverage amount when making your final decision. Paying a little higher premium for lower deductibles and broader coverage is still a good deal. 

Dan Jackson
Dan Jackson
He is both a content writer and a moving expert. Dan's passion for research and writing quality content that give insights to consumers on their purchasing decision has been excellent over the years. He studied linguistic art in one of the best universities in California.
Dan Jackson
Dan Jackson
He is both a content writer and a moving expert. Dan's passion for research and writing quality content that give insights to consumers on their purchasing decision has been excellent over the years. He studied linguistic art in one of the best universities in California.

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1 Comment

Caire Waters
February 16, 2020 at 2:38 am

Nice article you have here…. But please we need articles on real estate suggestions for people moving cross country. Thank you for your help. This site has always been a help to me whenever I’m moving. All your moving company suggestions are always on point. But please, don’t forget REAL ESTATE articles as requested. Bravo!

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