As a renter, you’ve heard of renters insurance and might have even been required to purchase it before renting. But you may not know exactly what renters insurance does and why it matters so much for renters to have it.
Renters insurance is useful and much needed protection against a variety of accidents and unfortunate circumstances that might befall your living space, whether you’re renting an apartment or single-family home.
Here’s what you need to know.
What Does Renters Insurance do?
Renters insurance, like any other form of insurance, is a protection against accidents, losses, and damages. You pay in usually at a low monthly premium, then depending on the terms of your insurance when a loss occurs, you pay a deductible before the insurance company can cover the rest of the value of the damages.
Without renters insurance, you are simply out should your property be stolen or destroyed in an accident that occurs in the rental space. With insurance, you can protect yourself even against liability and medical claims. Renters insurance can even help you pay certain expenses during hard times, like if your living space becomes uninhabitable.
What renters insurance doesn’t do is protect the property in which you’re living. For structural damages and accidents, that’s where the homeowner or property manager’s insurance comes in. Both types of insurance are highly recommended if not required to ensure all parties are protected in a rental situation.
What Renters Insurance Covers
You may understand that renters insurance protects your belongings, but what does that really mean? Will renters insurance actually cover the costs of your Mariah Carey CD collection or your hand-me-down furniture in the event of theft or natural disaster? You bet. But that’s not all. Renters insurance is so valuable because it covers liabilities and offers help for the times you need it most.
Plus, it’s cheap.
But please note, insurance terms can vary, and you need to thoroughly understand your coverage before signing up.
Here is a more detailed list of what renters insurance typically covers:
Your Belongings
One of the central components of standard renters insurance is that it covers the value of your personal belongings. And yes, that means everything.
Take into account the value of all your home items. Consider making an itemized spreadsheet even of your belongings and the cost of replacing them. Then, purchase a Replacement Cost on Contents settlement for your renters insurance. This will guarantee that you receive the cost to replace your belongings in an emergency rather than getting back only the value of your items depreciated by time and use. Without this kind of settlement, you might receive only $100 for your custom-built $800 desktop PC.
Of course, there will be plenty of items in your home that can never be replaced, whose worth is more sentimental than it is monetary. While renters insurance can’t cover that kind of value, receiving a settlement can help you rebuild your life and return much needed normalcy after a disaster.
Emergency Living Expenses
Not only will renters insurance return the cost of damaged items, it will protect you against the unexpected. We all face circumstances ever now and then that result in a negative outcome, and renters insurance is there to help. If your rental becomes unlivable due to a blown water line beneath the property, a fallen tree, or any kind of destructive occurrence covered in your policy, renters insurance will pay for you to safely relocate while repairs are made.
Every policy has its limits and specifications on what is and isn’t covered, so be sure you understand the exact terms of your agreement.
Liability
In the even that someone is accidentally injured in your home, renters insurance can offer protections, depending on the circumstances. For example, if a visiting acquaintance slips on a banana peel and receives a very serious and non-comedic injury for which they blame you, your insurance policy can pay for an agreed portion of the injured party’s medical expenses, letting you off the hook. In the event that the injured party attempts to sue you, your policy can also provide the legal fees needed to defend yourself.
Though the likelihood of accidents like these may seem slim, they happen all the time. Renters insurance makes sure you and everyone who visits your home are safe and protected.
What Renters Insurance Covers and What it Doesn’t
Here’s a larger list of what renters insurance typically covers and doesn’t cover:
Cost of Renters Insurance
The best news regarding renters insurance is that it is highly affordable. Depending on the coverage you are seeking and the value of your belongings, you can become insured for as low as $15 a month. That’s the cost of an HBO subscription.
Your insurance costs will vary, however, depending on these 5 factors:
1. Value of Your Belongings
The total cost of your items will determine your monthly premium. But you don’t want to underestimate the value of your belongings. Be honest about the worth of your household so that you get the most back in an emergency.
2. Actual Value vs. Replacement Value
As we mentioned earlier, a cost of replacement settlement is a highly recommended aspect of renters insurance that you don’t want to be without. Replacement value might raise what you pay for insurance, but it guarantees that you get enough back to actually replace your damaged or stolen items instead of only getting back their depreciated value.
3. Amount of Liability Coverage
If you’re concerned about household accidents, taking out a higher liability policy is a great idea. However, the higher liability coverage you have, the higher your monthly premium is going to be.
4. Deductible Amount
The deductible amount is the minimum amount you have to pay into your insurance separate from the monthly premium in order for the policy to take effect. For example, if your deductible is $500, you will need to pay that amount before your insurance can cover the damages. You can reduce the amount of your deductible, but it means paying a higher monthly premium. For a few extra dollars a month, you can guarantee that you don’t have to shell out much money in an emergency.
5. Location of Your Rental
This factor doesn’t give you much of an option. The costs of your insurance can vary depending on the area you live in. For example, if you live in tornado alley and the crime rate also happens to be especially high, you might have to pay higher premiums and deductibles, as the higher risk necessitates higher fees.
Additionally, many insurance companies offer a variety of discounts based on other home protections you might have, such as a security system or a fire extinguisher. Ask for any available discounts as you browse insurance products to make sure you’re saving all the money you can.
Why Renters Insurance Matters
Now that you know all the protections that renters insurance offers, you understand why it matters. Not only is a renters insurance policy protecting your belongings, it’s protecting your friends and family from all kinds of accidents. With renters insurance, you can help pay medical bills, pay for a hotel and food if your home becomes uninhabitable, and recover the costs of stolen or damaged items.
Renters insurance is a low-cost way to keep yourself safe and financially secure. While it may not be necessary for you to purchase it depending on your lease agreement, it is recommended in every rental situation. You won’t know the value of your items until you are trying to replace them after a fire or break-in, so take steps to protect yourself today.
Purchasing renters insurance can be as simple as shopping around online and sending out inquiries. You can browse for the best policies and insurance products that will keep your belongings safe in all kinds of circumstances. For financial security at a low price, you can find a plan that works for you.
For more information on rental protections and real estate investment, contact 208.properties today.