Your landlord’s insurance will only cover the costs of repairing the building if you rent a house or apartment and there is a fire or other tragedy. You will need to purchase renters or tenants insurance to protect yourself financially.
Protections provided by renters’ insurance
Renters insurance, like homeowners insurance, provides three sorts of financial protection:
- Coverage for personal possessions
- Liability protection
- Additional living expenses (ALE)
The main distinction is that renters insurance does not cover the building or construction of the unit; that is the landlord’s responsibility.
When looking for renters insurance or discussing your needs with an insurance agent, ask yourself the following questions to help you choose the correct policy.
Protection for personal belongings
Renters insurance includes personal property coverage, which protects you against theft, fire, and a variety of other calamities.
1. What kind of insurance should I get?
In the event of a burglary, fire, or other covered disaster, be sure you have adequate insurance to replace all of your personal belongings. Making a home inventory—a complete record of all of your goods, together with their estimated value—is the simplest method to figure out how much they’re worth.
2. Should I get coverage for replacement cost or real cash value?
Depreciation is taken into account in actual cash value policies (that is, the idea that items lose value over time). Replacement cost coverage is more expensive, but it might be well worth it if your things are damaged or destroyed (consider how much you’d get for your TV against how much it would cost to replace it).
3. What disasters are covered, and which ones aren’t?
Fire, smoke, lightning, vandalism, theft, explosion, windstorm, and some types of water damage are all covered by renters insurance (such as from a burst pipe or when the tenant upstairs leaves the water running in the bathtub and floods your apartment).
Most renters insurance policies, like conventional homeowners policies, do not cover floods or earthquakes. The National Flood Insurance Program and a few commercial insurers offer flood insurance. Depending on where you reside, you can purchase earthquake insurance separately or as an endorsement to your renters policy.
4. How does my deductible operate and what is it?
A deductible is the amount of money you must pay before your insurance coverage kicks in. For example, if you have a $500 deductible and a fire destroys $5000 in furniture, you will be responsible for the first $500 and your insurance provider would cover the remaining $4500.
Deductibles for renters insurance are usually indicated in dollars and can be found on the Declarations page of your policy. The higher your deductible, the lower your insurance cost will be.
5. What exactly is a “floater,” and do I require one?
A floater is a supplemental policy that provides additional coverage in the event of a loss or theft of more valued items. Consider adding a floater to your insurance policy if you have valuable jewels, furs, collectibles, sports equipment, or musical instruments.
6. Do I have coverage if I travel or am away from home?
Off-premises coverage is included in most renters policies, which means that belongings outside of your house are insured against the same calamities as those specified in your policy. Property taken from your car or a hotel room while you’re traveling, for example, would be covered.
7. What is the definition of liability insurance?
Renters insurance protects you from lawsuits resulting from personal harm or property damage caused by you, your family members, or even your pets. Up to the limit of your insurance, this coverage pays for the cost of defending you in court.
As part of the liability protection, your renters policy should contain no-fault medical coverage. Medical payments coverage permits someone who is injured on your property to submit his or her medical bills to your insurance provider directly, allowing the bills to be covered without the need for a lawsuit.
8. Do I have adequate liability coverage?
Check to see if your policy’s liability coverage is adequate to safeguard your financial and other substantial assets in the case of a lawsuit.
Is it necessary for me to have an umbrella liability policy?
Consider acquiring a personal umbrella liability policy if you require more liability coverage. When the underlying liability coverage offered by your renters or auto policy reaches its limit, an umbrella policy kicks in. It will also protect you from libel and slander claims.
Living expenditures not covered by insurance
If your home is destroyed by an insured disaster and you need to relocate for a period of time, additional living expenses (ALE) coverage protects you.
9. What is the scope of ALE?
Hotel bills, interim rentals, restaurant meals, and other expenditures incurred while your rental home is being repaired or rebuilt are covered by the additional living expenses section of your rental insurance policy. It essentially covers the costs that you would not have to pay if you had your regular roof over your head.
10. What is the scope of ALE’s coverage?
Most policies will reimburse you for the entire difference between your additional living costs and your regular living expenditures; however, there are usually limits to the overall amount the insurer will pay, as well as time limits on how long you can receive ALE payments. Make sure you’re happy with the policy’s limitations before you buy it.
Discounts on multiple policies and other items
10. What types of renters insurance discounts are available?
If you have another policy with the same company, such as vehicle or business insurance, you may be eligible for a discount on renters insurance.
You might also qualify for a discount if you:
- Have a security system installed.
- Make use of smoke detectors.
- Make use of deadbolt locks.
- Have a good credit score
- Continue to use the same insurer.
- Are you over the age of 55?