What Does a Renters Insurance Policy Cover?
Do you know who’s financially responsible if there’s a fire, theft, or other danger in a house or flat you rent? You’re wrong if you think it’s your boss. The insurance coverage that your landlord has doesn’t cover your personal belongings. Renters insurance is what you need.
What does insurance for renters cover? It covers your personal belongings, shields you from being sued, and can pay for a place to stay if a disaster makes your home unlivable. Basically, it keeps your money safe from disasters.
It’s cheaper than you might think, which is good news. Here’s everything you need to know about what renters insurance covers, what it doesn’t cover, and how much it costs. On Insurify, you can compare prices for renters insurance right now.
What Does Coverage for Renters Mean?
Renters insurance, also called tenant insurance, saves you from financial loss if you rent a house or apartment.
If you have homeowners insurance, you already know what kinds of things renters insurance covers. After an accident or disaster at your home, a renter’s insurance can help pay to fix or replace damaged or lost items.
It’s important to have in case of a disaster. A poll by ORC International and the Insurance Information Institute (III) found that only 37% of renters have renters insurance.
What does insurance for renters cover?
The Insurance Information Institute (III) says that many renters think that their landlord’s insurance coverage will cover their personal belongings. But that’s not true at all. Only the building itself is covered by the landlord’s insurance. It can also cover a garage, shed, or gate that is separate.
But if your bike is stolen or your personal items are destroyed in a fire, you need your own renters insurance policy to cover that.
Instead of paying for repairs or replacements out of your own money, you can use renters insurance. But renter’s insurance gives you extra benefits that can help you. Your insurance can cover more than just your personal property. It can also cover medical bills, personal liability, and loss of use.
Personal Property: If you have standard rental insurance, your things are covered against fire, theft, and bad weather. It doesn’t cover storms or earthquakes, which is a shame. But you can buy extra covering if you want to be protected against flooding or earthquakes.
How much rental insurance you need is based on how much your things are worth.
You can find out how much it would cost to replace your furniture, clothes, electronics, and other things by adding up how much they cost. Then, make sure that your property insurance has enough coverage for all of your things.
Coverage for Medical Payments
A typical policy covers hospital payments no matter who was at fault. That means that if a guest gets hurt in your home, your renters insurance company can pay for their medical bills.
Your coverage can be different, but most plans cover medical costs that cost between $1,000 and $5,000.
Own Responsibility
The personal liability part of your insurance will help you if you cause serious injuries or damage to property.
Renters liability insurance protects you from claims if you, your family, or your pets hurt or damage someone else’s body or property. It can pay for legal fees and court judgments if you are found to be legally responsible.
Loss of Value
Loss of use pays for extra costs of living if you can’t live in your house or flat while it’s being fixed.
For example, say a fire makes your home uninhabitable. In that case, your renters insurance will pay for hotel bills, temporary housing, meals, and other costs until you can safely move back into the home.
Supplemental Coverages
In addition to the four main coverages, a standard renters insurance contract gives you access to the following:
Debris removal pays to clean up after a loss that is covered.
Building additions or alterations are covered if you paid for the upgrades or changes to the rental property out of your own money.
Forgery of credit cards and checks pays for losses caused by theft or fraud when your credit card or fake checks are used.
Spoiled food pays for the cost of food that goes bad because of a power or mechanical failure.
There are also add-ons and guarantees that you may want to get from your rental insurance company. For example, you could buy protection against earthquakes or floods by buying earthquake or flood insurance.
What isn’t covered by renters insurance?
Floods and storms are usually not covered by renters insurance. Some businesses will let you add a recommendation for them. In some cases, you may need to buy a separate insurance to get the coverage you need.
If you live in a high-risk place for flooding, you might want to get flood insurance through a private company or the National Flood Insurance Program.
Your insurance might also not cover expensive things like jewelry, art, collectibles, or musical instruments.
You can cover those things by adding a “floater” to your insurance. A floater is a separate insurance policy that covers more expensive things that your rental insurance doesn’t already cover.
How much does insurance cost for renters?
The III says that the average cost of renters insurance in the U.S. is $179 per year. How much you pay varies mostly on how much coverage for your personal property and liability you buy. Your rate can also be affected by where you live, your ZIP code, and how likely it is that a disaster will happen.
For example, the average cost of renters insurance in North Dakota is $126, making it the least expensive state in which to buy it. On the other hand, the average rate in Mississippi is $252, making it the most expensive state.
The type of policy you choose will also affect how much you pay. There are two ways to get renters insurance:
Replacement cost coverage pays the current market worth to pay for a brand-new version of your damaged or stolen items. The most that can be paid is the ceiling of your policy.
Actual cash value takes into account how much your things have lost in value before giving you a check. The most that can be paid is the ceiling of your policy.
The difference between what it would cost to replace and what it would be worth in cash is big. So, let’s say you bought a mattress for $1,500 five years ago. About 10 years is how long most beds last. That means the value of your mattress goes down by $150 every year because of wear and tear.
With a replacement cost coverage, if a covered loss damaged your mattress, your insurance company would pay the full $1,500.
With real cash value, on the other hand, the insurance company takes depreciation out of the amount they pay out. Since you bought your mattress five years ago, you only get $750 to buy a new one ($1,500 minus $750, which is how much it has lost in value).
Most of the time, a replacement cost policy costs more because the payout is generally higher. But if you think about how much coverage your policy gives you, the extra cost may be well worth it.