The big question about renter’s insurance is whether to have one or not. Some landlords require their tenants to have renter’s insurance, while others do not.
Unlike homeowner’s insurance, renter’s insurance will cover damage to the property of the tenant, but no structural damage to the rental unit. The scope of coverage will depend on the premium and policy chosen.
While your landlord, or the law of land, may not compel you to get renter’s insurance, it is best to weigh the benefits vis-à-vis the cost of getting a policy.
Continue reading for an in-depth understanding of renter’s insurance, particularly if you’re searching for monthly rentals.
What Does Renter’s Insurance Cover?
A renter’s insurance policy will, in most instances, cover damages to the tenant’s property and injuries to oneself or other parties that occur inside the tenant’s rental unit. Additionally, the policy will also cater to the tenant’s living expenses in an event where their rental unit is rendered unliveable.
For example, if a fire in a neighboring apartment requires you to vacate your apartment, the policy will cover your living expenses at a temporary location.
One compelling argument for a renter’s insurance is the liability coverage. The liability cover saves you from unnecessary expenses in the event of you inflicting injury or damage to another party. Put simply, your insurance will pay for damages or injuries you cause outside your home.
Even better, renter’s insurance will cover your property even if the damage or loss happened outside your rental unit. For instance, if your items were stolen from your vehicle or your bicycle got stolen outside a shopping mall, renter’s insurance will cover the cost of these items.
Renter’s Insurance Limitations
Like other policies, renter’s insurance has limits on what it covers. The limits usually depend on the policy chosen and the insurance company. However, there are blanket limits that apply to most renter’s insurance policies. For example, items like expensive art or jewelry will have limits between $1,000 and $1,500, depending on the insurance company.
It is important to note that all renter’s insurance policies are not similar. Different policies will offer different coverage, and will also come with varied limits. It is upon you as an insurance seeker to read the fine print before settling on a policy.
Do I Need It?
This is probably the most fundamental question in every tenant’s mind – Do I really need renter’s insurance?
Renter’s insurance can be mandatory if your landlord or state laws require you to have it. However, even if nothing mandates you to have renter’s insurance it is highly advisable to get it due to its benefits. Just like medical insurance or car insurance, renter’s insurance is essential for every tenant.
Data from the National Safety Council indicates that over 53% of accidents occur at home and a further 27% in public places, compared to just 9% on our roads. Yet, the latter arena dominates the insurance industry.
Keeping that in mind, it makes more economical sense to invest in renter’s insurance, as it covers you against accidents at home and in public places. In addition, this insurance is the ultimate value for money, as it is affordable and offers wider coverage.
Choosing a Renter’s Insurance Policy
Once you have decided to get renter’s insurance, your next steps should be guided by how much coverage you need. The basis of this should arise from the projected worth of your property.
No, we are not asking you to get into an extensive valuation exercise; just a rough estimate of the important items in your house will suffice. This will enable you to understand the scope of coverage that you will need.
The next step is insurance policy hunting. Go through as many listings as you can! Compare offers from different insurance companies while taking into consideration coverage, policy price, pay-out plans, and, most importantly, limitations.
When choosing an insurance company, consider their pay-out plans. There are two payment plans: cash value pay-outs, and replacement value pay-outs.
For policies with cash value pay-outs, the insurance company will pay the cost of the damaged item while factoring in the depreciation index. For replacement value pay-outs, your insurance company will meet the cost of repair or provide you with a new item of similar quality to the damaged one.
Either as a mandatory requirement or a personal choice, renter’s insurance is essential for every tenant. It covers you from unnecessary costs associated with property loss or damage, injury to yourself and others, and additional living expenses.
In addition, this type of policy covers the holder against a variety of accidents, not just at home, but also in public places. Renter’s insurance policies vary in pricing and coverage scope, and therefore the onus is on the tenant to decide which policy is ideal for them.