What Is Renters Insurance & What Does It Cover In 2020?
If you’re renting a home or apartment and you don’t have renters insurance, then you are incredibly vulnerable for tragedy..
You could lose your possessions in a fire, burglary, a burst pipe, or other disasters.
Many renters believe that their landlord’s insurance will cover them for damages, but , this isn't the case.
Your landlord likely has homeowners insurance, which covers the structure itself, but none of your worldly possessions aren’t eligible for this protection.
Because not everyone knows this caveat, only about 37% of renters have renters have insurance. This number is drastically different than the 97% of homeowners that have homeowners insurance.
In this post today, you’ll learn more about what renters insurance covers and how much coverage you should get.
In This Article
What Is Renters Insurance?
“In Plain English,” a renters insurance policy is protection against the loss of personal property while living in a rental home or apartment.
A renters insurance policy not only protects your belongings, but it can also help cover your medical bills and personal liability.
For just a few dollars a month, you can have peace of mind that everything in your home is protected.
Plus, your belongings are also covered when you travel.
So, if your car gets broken into, your luggage gets stolen overseas, or someone at a café spills coffee on your laptop, then your items are all covered by renters insurance.
What Does Renters Insurance Cover?
16 different events qualify for renters insurance coverage, including fire, theft, vandalism, smoke damage, falling objects, and leaking from overflowing water.
Most people think of renters insurance covering only your personal property, but a policy also affords you other types of coverage as well.
Anything that you own is eligible for coverage, from your furniture to your shoe collection.
With the exception of expensive jewelry and valuable collectibles, a basic renters insurance policy will cover the following:
Personal Liability & Medical Bills
Accidents happen, and if someone is injured at your home (or you inadvertently injure someone when you’re out on the town), you could be held liable for damages and medical expenses.
Your renter’s insurance would cover you for these instances, but keep in mind that if you’re injured, you won’t get any benefits. Your injuries would default to your medical insurance.
Loss of Use
If your home is uninhabitable as a result of a covered incident, the “loss of use” clause in your policy pays for temporary housing arrangements, including a hotel or a short-term rental.
In some instances, you may receive a per-diem to cover food costs, especially if they exceed your typical grocery bill spend.
Other Types of Coverage
Renters insurance can be truly comprehensive and cover circumstances that you might not have thought of:
Other people’s property: If you borrow an item for a friend or neighbor and it gets damaged in a covered event, then your policy would pay for the item to be replaced.
Your property in other locations: Your policy will cover your belongings, even if they’re not inside the walls of your home. This includes your car, your storage unit, or anywhere you travel.
Food: A power outage can ruin all the food in your refrigerator, but thankfully, your renter’s insurance would cover the replacement cost of the groceries that spoil.
Credit card and bank forgery: Though banking companies have stepped up and increased their protection for fraudulent charges, you’ll have peace of mind knowing that your renter’s insurance will also protect you if someone steals your credit card or checkbook.
What Renters Insurance Won’t Cover
Despite how useful and valuable renters insurance is, it doesn’t cover absolutely everything.
Before you get surprised by an uncovered event, it pays to know what renters insurance won’t cover:
Property damage caused by pests
Rodents, termites, and other pests and vermin can cause significant damage, but unfortunately, these damages aren’t eligible for reimbursement with renters insurance.
Floods, earthquakes, and sinkholes won’t be covered, but some natural disasters are still eligible, including volcanoes and windstorms.
If you live in an area prone to natural disasters, consider purchasing a separate policy.
Basic policies have restrictive limits that might not provide enough coverage for expensive items like antiques, precious jewels, and art.
To protect these valuables, you’ll likely need a separate policy.
Nuclear war and terrorist activities
Since 9/11, terrorist activities are no longer included in most policies.
Your roommate’s property
Even though other people’s property can be covered if you damage it, people that live in your home need their own policy if they want to be covered.
You can potentially get a discount by purchasing a joint policy with your roommate.
Rental Insurance Myths
There are several myths about rental insurance that we should clear up before we start discussing what it will actually cover or not cover:
A Renter's Insurance Policy Is Too Expensive
This myth couldn’t be the furthest from the truth, the average renter's insurance policy nationally runs at around $12.00 per month or $144.00 per year.
These policies usually have $10,000 in personal property coverage, about $100,000 of renters liability insurance and a $250.00 deductible.
If you take the above information into consideration, you can easily see you are able to get renters insurance for cheap without losing a large amount of the benefits.
You’re Covered By Your Landlord
Anyone that owns your property, a landlord or even a property manager is only responsible for any damage or loss to the actual apartment complex itself.
They are not responsible for your personal property.
If your neighbor's water heater explodes or the building is on fire, the property owner’s insurance will cover the damage to the walls or structure of the apartment.
The landlord's insurance company will not pay for any damages or loss that you incur from either of those situations.
That is where your renters insurance will kick in and cover your loss.
Most apartment complexes are requiring renters insurance coverage before you can move into your unit.
You Won't Need Cash While Waiting For A Claim
The worst position you can put yourself into is needing to file a claim but not having the available cash to take care of yourself and your family until help arrives.
It is always a good idea to keep a side stash of cash for situations just like this.
How Much Renters Insurance Do I Need?
When you structure your renter’s insurance policy, the first thing to decide is whether you want actual cash value coverage or replacement cost coverage. Here’s the difference:
Actual cash value coverage
You’ll be reimbursed for the cash value of your items. Keep in mind that this means you’re unlikely to get enough money to replace the item.
Replacement cost coverage
The funds you get will be equivalent to buying a brand-new version of your item so that you can replace it.
Average policies range from about $10,000 to $40,000 in coverage.
If you do have expensive items, including collectibles, you can purchase an additional rider to protect your valuables.
On average, the value of renters’ items tends to be around $20,000, so that should help serve as a benchmark to get started.
Unless your landlord requires you to have it, you might not think you need renters insurance.
However, given that policies can cost as little as $20 per month or less, it pays to have protection.
You never know what can happen, and having to replace all of your items at once can be financially catastrophic.
Don't waste any time thinking about this, click here or one of the buttons on the page to get your instant quotes and your instant coverage... Better safe than sorry!
IN THIS ARTICLE
Sa El is the Co-Founder of Simply Insurance and a licensed Insurance Agent with over 11 years of experience in the industry. He specializes in Life & Health Insurance and is certified in Long Term Care Insurance in the state of Georgia. He is also an Official Member of the Forbes Finance Council, a licensed real estate agent in the state of Georgia (License #382602), an entrepreneur, insurance educator, and freelance writer.