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Renters Insurance: All you need to know

  • Renter's Insurance
  • Nick Jonathan
  • 7 minutes

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Do your personal belongings mean a lot to you? Have you ever wondered how to replace them in the event of a fire or theft in your rental? Read on to know more about renters insurance.

If you’ve taken a mortgage to buy a home, then chances are you have homeowners insurance. Banks and lenders of home loans generally require new homeowners to carry homeowners insurance. It helps protect their property, possessions, and any injuries sustained by visitors. But what if you live in a rental apartment or a mobile home? Is it possible to get the same level of insurance coverage for your belongings as your landlord? The short answer is yes.

Renters insurance is a type of property insurance that covers losses to your property. It even protects the covered individual from liability claims if visitors sustain any injury in your rented property. While your landlord is responsible for the structure you live in, having renters insurance can help pay for replacing your belongings in the event of a natural disaster, fire, or theft.

What does the renter’s insurance cover?

Renters insurance reimburses you for losses to your items that are covered by the policy. It also protects you if someone sues you after being injured in your rental property. Most plans will reimburse you for any interim living expenses if a storm or fire damages your rental unit or home. Renter’s insurance also covers the following:

Personal belongings

Renters insurance, or HO-4 policy as it’s commonly called, is for renters. It covers personal property damages caused by disasters such as hail, explosions, riots, aircraft or car damage, vandalism, and volcanoes, among others. Generally speaking, renters insurance covers the contents of your rental home, while your landlord’s homeowners insurance covers damage to the property. Damage to your possessions from fire, theft, vandalism, plumbing, and electrical problems comes under your renter’s insurance policy. Floods and earthquakes, on the other hand, are not protected and must be covered separately.

Liability

Liability coverage in your renter’s insurance policy covers you up to a specific amount if you are sued for an injury sustained by someone at your rented house. It also covers harm caused to others by you, your family, or your pets. It covers any court hearing and legal costs up to the policy amount, normally $100,000 but can go up to $300,000.

Living expenses

This coverage ensures that you will be compensated for temporary accommodation if your home is uninhabitable due to one of the specified risks. Hotel bills, restaurant meals, short-term rentals, and other costs incurred while renovating your home are all covered.

Most renter’s insurance providers offer special coverage limits for personal property such as boats and watercraft equipment. Additionally, if you are a collector of some sort (coins, comic books, custom stamps, trading cards, etc.), you could get coverage for your collection, too! Finally, renters insurance can also cover the loss of expensive items, such as jewelry, firearms, silverware, rugs, tapestries, etc., due to theft.

What doesn’t renters insurance cover?

We recommend reading the fine print carefully to understand better what’s not covered under your renters insurance policy. In general, renters insurance does not cover damage caused by a tenant’s negligence. Some policies do not cover “acts of God,” such as earthquakes and floods.

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Suppose you have unusually expensive items, such as high-end electronic equipment, musical instruments, or highly prized arts and antiques. In that case, you may need to get additional coverage such as floater insurance in the form of a rider, a provision that amends the terms of your basic insurance policy.

How does renters insurance work?

If your belongings are damaged or stolen, or if one of your guests is injured in your rented property, you can make a claim. If your claim is covered, your insurer will compensate you for damages up to the limits of your policy.

Apart from the premium, your policy will have a deductible – an amount you must pay if you have a claim. If your deductible is set at $1,000 and you accidentally damage a couch worth $3,000, you will need to pay your deductible ($1,000) before the insurance company can cover the rest ($2,000). Keep in mind that the higher your deductible, the more you will have to pay out of pocket to repair or replace the damaged item. Fortunately, the higher your deductible, the lower your overall renters insurance rate will be. So set your deductible wisely.

How to apply for renters insurance

Compile a list of your possessions

Before applying for renters insurance, we recommend taking photos or videos of everything you possess. If you own any expensive objects, like a high-end laptop or a PC, note down their serial number as well. Making a list of things you possess will help you from underinsuring. While you may think that not all of your belongings are worth a lot of money, insurance provider USAA estimates that an average renter’s possessions are worth around 25,000. Hence, it is important not to underinsure when you are applying for renter’s insurance.

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While your insurance company may not want the inventory or images when you purchase the policy, they will be necessary if you ever need to file a claim. Keep copies of your inventory somewhere safe, like your email account, so they don’t get destroyed if your rented unit goes up in flames. The next step in the process is to find a suitable insurance company that meets your needs.

Shop around

Here, we recommend shopping around to obtain at least three quotes to find which firm offers the best deal. Nationwide, State Farm and MetLife are some of the country’s largest and best-rated insurance providers. However, you could also opt for smaller firms that only operate in your state.

You could even get discounts on your insurance policy by bundling your auto insurance with your renters insurance. So, speak to your insurance agent to find out various discounts you may be eligible for.

Start applying

Once you’ve found the best insurer that meets your needs, it’s time to start your application process. Several insurance firms now allow you to apply online. Find out the benefits of applying for insurance online here.renter's insurance offers

Review your policy

While submitting your application, you will have the option to choose between actual cash value and replacement cost coverage. While the former covers what the property was worth at the time of damage, the latter can give you enough compensation to replace the damaged items after paying your deductible. On average, replacement cost coverage is around 10% more expensive than actual cash value coverage.

Read: Factors that determine the cost of auto insurance

Next, it’s time to determine your deductible. As mentioned earlier, the higher your deductible, the lower your annual premium. Your deductible could vary from $500 to $2,000. Our studies have shown that raising your deductible from $500 to $1,000 could save you up to 25% on your annual renter’s insurance rate.

Once you receive your new renter’s insurance, please read it carefully. This is to ensure you understand what is and is not covered, as well as any nonstandard supplementary coverage you select


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