While most people know how important it is to have homeowner’s insurance, many never stop to consider whether renters also need to protect themselves. Renter’s insurance is a type of insurance that protects the renter, as well as their property.
Just like other forms of insurance, customers will choose their amount of coverage and deductible, and be then required to pay a monthly premium based on these, as well as a few other, factors.
The amount of coverage that a renter chooses should account for the value of their belongings and offer enough coverage that they are adequately protected in case of an emergency.
What is Renter’s Insurance?
Renters can choose from policies that will pay the replacement cost or Actual Cash Value (ACV) of their belongings.
Policies that cover the actual cost of replacing items, rather than their depreciated worth, or ACV, are more expensive. However, these policies will be worth the additional cost if a renter should find him or herself in a situation where their belongings need to be replaced.
For example — If you paid $500 for a computer you would think that’s what you would get if something should happen to it, right? Not necessarily. With Actual Cash Value (ACV) the insurance company takes into account how long you have owned the computer to figure out it’s value. It’s like if you were selling it on Craigslist. You wouldn’t get the new value of the computer. You might only get $100 of that $500 you paid. And if you need a computer you would have to shell out the difference to buy a new one. This is a bit of information many people don’t know about or understand until they need to make a claim.
Most renter’s insurance policies will also offer liability coverage.
Customers may also choose how much liability coverage they need, depending on their budget and the amount of protection they feel most comfortable with. Liability coverage will help protect a renter if they are sued due to an accident that happened in or on the property they rent. (Imagine you host a party and a friend’s friend comes and trips on your carpet and breaks their wrist — You are at risk of being sued for liability.)
Five Reasons Why You Need to Protect Yourself with Renter’s Insurance:
1. Renter’s insurance will cover the cost of belongings lost in a fire, due to lightening, a windstorm, or hailstorm.
Losing your belongings in a fire or storm can be devastating. Luckily, those with renter’s insurance are covered in these situations and can be compensated for their loss.
2. Renter’s insurance can protect you from theft.
While these policies cannot actually stop a theft from happening, they will cover the cost of lost items. Depending on whether a person chose ACV or replacement cost personal property coverage, the insurance company will cover the depreciated value of the stolen items or the cost to replace them.
3. If your home is damaged and uninhabitable, renter’s insurance can cover the cost of other living arrangements.
Most people don’t have the money to pay for a hotel while their home is being repaired. Luckily, renter’s insurance will cover the cost of a customer’s living arrangements until their home is again inhabitable.
4. Renter’s insurance covers the costs of accidents that occur on a renter’s property.
If a person is hurt while on your property, you may be held liable, even if you aren’t necessarily to blame. The liability coverage in a customer’s policy will protect them from being sued for medical bills or other costs.
5. If a person loses important items while traveling, renter’s insurance can cover that too.
Losing a suitcase while traveling is extremely frustrating. Most airlines will only reimburse customers up to a certain amount, which may be less than the lost items were worth. Fortunately, renter’s insurance may cover the remaining cost of the lost items, which makes these policies all the more valuable to renters who frequently travel. (Renter’s insurance can also cover an engagement ring, though you will have to have it appraised for the insurance company. If you recently got engaged you want to make sure that little rock is protected!)
Don’t make the mistake that many people do and think the one that owns your apartment will have insurance and you are taken care of. Fact is, their insurance will cover the physical home but not your belongings or liability.
Also don’t make the mistake of thinking you don’t need renter’s insurance because your stuff isn’t that valuable. Unless you have enough put away to cover theft costs or liability costs, you need to make sure you are covered.
Truth is, renter’s insurance is a fraction of the cost of homeowner’s insurance and depending on the coverage you need, you may find the cost is pretty low (could be from about $100 and up a year, depending on your needs).
And with many insurance companies, if you bundle your renter’s insurance with something like automobile insurance you will probably get a discount. Also check with your employer and see if there are any company discounts on insurance plans.
The cost of the insurance will be well worth it should something happen to your home! Contact FPME if you need help with this.