Renters insurance: your in-depth guide

renters insurance

Whether you’re renting your first apartment or your fifth, you may have some questions about renters insurance. What is it? Do I really need it? Is it affordable? We’ve got you covered. Read on to learn everything you need to know about renters insurance.

What is renters insurance?

Renters insurance is a form of insurance policy that pays out if your goods are damaged or stolen and need to be fixed or replaced.

Who needs it?

Any tenant with valuables that they can’t afford to repair or replace — or simply don’t want to pay the entire cost of replacing after an accident — should consider purchasing renters insurance. Consider all your possessions and how much it would cost to replace them in the event of a burst pipe, for example. This may rapidly add up, and renters insurance can help protect you from any unexpected costs.

Is it required?

Renters insurance is not needed by law. However, landlords frequently demand renters insurance as a condition of signing a lease. They are permitted to do so, so be prepared to get renters insurance if you haven’t already done so while filling out a rental application.

What does it cover?

Renters insurance will cover objects that have been destroyed or stolen as a result of one of the following events:

  • Lightning and fire
  • Hailstorm with strong winds
  • Explosions
  • Riots
  • Aircraft-related damage
  • Vehicle-related damage (not your own)
  • Damage caused by smoke
  • Vandalism
  • Theft
  • Eruption of a volcano
  • Objects that fall
  • Snow, ice, and sleet weight
  • Water or steam leakage or overflow
  • Frozen plumbing, heating, and air conditioning systems
  • Short-circuit damage caused by electrical appliances
  • Medical and liability bills, as well as the costs of temporary relocation and credit card fraud, may be covered by your renters insurance policy

Be sure to review your policy to see exactly what is covered by your renter’s insurance.

What’s not covered?

Most natural disasters, like earthquakes, flooding, and tornadoes, are not covered by your insurance. Pest damage, as well as harm caused by terrorism or war, are not covered.

Can roommates share renter’s insurance?

Yes, technically. Your renters insurance policy may allow you to add a roommate. But, before you do, give it some serious thought. You’ll essentially be doubling (or more) the amount of items covered, which means you’ll likely approach your coverage limits sooner. Plus, if you or your roommate decides to leave, you’ll have to disentangle your policies, which can be difficult if you don’t depart on good terms. Renters insurance is inexpensive, therefore each roommate should ideally have their own policy that covers their personal belongings.

How much does it cost?

Renters insurance is inexpensive when compared to other types of insurance. A renters policy’s cost is determined by the total worth of the property you’re insuring, your location, your credit score, and the type of policy you purchase (explained below). According to the Insurance Information Institute (III), the typical annual renters insurance coverage is $300.

How do renter’s insurance policies work?

A regular renters insurance policy includes a variety of coverage options. The following is a rundown of how renters insurance works:

Deductibles

Before the insurance company participates, the policyholder is responsible for a portion of the cost. This is similar to how it works with your auto insurance policy.

ACV vs. replacement cost policies

Renters insurance with actual cash value will pay out based on the current value of an item. So, if you bought a laptop worth $1,000 five years ago and it was stolen now, you’d get a lot less than that. Renters insurance with replacement cost, on the other hand, will reimburse you for the cost of replacing the item. This means that should you ever need to replace that laptop, you’ll get $1,000 to do so. Replacement cost insurance often costs more in terms of premiums since they pay out bigger amounts than actual cash value policies.

Different elements of renter’s insurance policies

  • Personal property damage coverage – This covers the cost of replacing or repairing personal property that has been damaged or stolen.
  • Personal liability insurance pays for legal fees incurred as a result of property damage or injury.
  • Medical payment coverage – Coverage for any injuries sustained in your apartment.
  • Loss of use coverage – This covers the costs of accommodation, food, and other necessities if your rental is rendered uninhabitable due to damage.

What is additional living expense (ALE) coverage?

Additional living expense insurance is a type of coverage available under a renters insurance policy that covers a policyholder’s additional living expenses if they are temporarily displaced from their home. This policy typically accounts for 10% to 20% of the total insurance coverage for the home.

How do I decide how much coverage I need?

Here are some questions to ask yourself when deciding how much coverage you’ll need:

  • What would the cost of repairing or replacing my belongings be?
  • If I have a loss, how much of a deductible can I afford to pay?
  • Do I have any valuables that need particular safeguarding?
  • Do I have guests in my rental apartment or house?
  • Is there anything I’ve done to my rental that deserves to be protected?
  • Are there any discounts available to me?
  • What personal activities do I engage in (including sports)?
  • What kind of harm could my children or pets do?

How do I create an inventory for my stuff?

A renters insurance home inventory is a list of everything you own that your renters insurance policy could potentially cover. When filing a claim, this is useful because some insurers may need proof of ownership of an item. There are a variety of home inventory apps available that allow you to snap and document objects directly from your smartphone.

Does renters insurance cover claims outside the home?

Yes! Your belongings are covered by renters insurance no matter where they are. So, if something is taken while you’re on vacation, it’ll be insured, as will anything you store in a storage facility. What is covered depends on the specifics of your insurance, as it always does.

What are floaters?

Renters can add floaters to their policies to boost the coverage amounts for certain things. For example, a second jewelry insurance policy might help provide additional protection in the case of fine jewels.

Does working from home affect renters insurance?

Working from home might have an impact on your insurance, but it all relies on the scope of your remote work. If you own a small business, your standard rental insurance coverage will not cover anything related to it. For additional coverage, you’ll need to add endorsements to your current insurance policy.

The value of renters insurance

Renters insurance is an integral part of responsibly renting a home. It protects your belongings in the event of a disaster and can provide for your living expenses if your home is damaged to the point of needing serious repairs. What’s more, it can help cover your legal expenses if someone is ever injured in your home and decides to sue. And even with all of those benefits, renters insurance is remarkably affordable, with the average cost at $15 per month.

If you’re renting your home and don’t yet have a renters insurance policy, don’t wait any longer. Contact Elephant Insurance and get a quote today.

Was this article helpful?