What is Renters Insurance? and What Does Renters Insurance Cover?

What is Renters Insurance

Renters insurance protects your personal belongings from theft, fire, natural disasters, and other challenges. Generally, renters assume that the landlord’s insurance policy will cover the property, the renter’s personal belongings, and other factors, but that’s not how it works.

A landlord buys an insurance policy that protects the building in which you have rented the apartment. The landlord’s property insurance policy will cover any damage to the building, excluding the renter and their belongings. Although it’s not a necessity, some landlords prefer renters who have renters insurance that guarantees protection against liabilities that are uncovered by property insurance. Let’s see what coverage you can get from renters insurance and why you should buy it.

 

What Does the Renter Insurance Policy Cover?

Renter insurance covers most disasters that can cause damage to the renter’s personal property, including theft, smoke, fire, explosion, lightning, and water damage caused by plumbing and other internal issues. Note that it doesn’t cover damages caused by earthquakes and floods. Let’s explore the different types of coverage you can get from renter insurance.

Also read: What Is Condo Insurance? What Does Condo Insurance Cover?

Personal Property Coverage: Renters insurance covers your personal property, such as your kitchen equipment, toiletries, sports equipment, electrical appliances, bicycles, and other valuable appliances and accessories. Note that the insurance doesn’t cover all valuable items. If the item’s worth exceeds the insurance limit, they will be excluded from the policy. A few common examples of exclusions are jewelry, artwork, and other expensive equipment.

Note: You can choose from actual cash value and replacement coverage policies. The former pays you the cash value of the damaged items. If you want more comprehensive coverage, go for a replacement policy, in which your insurance provider pays you the replacement value of the items.

Personal Liability: As mentioned previously, you can’t rely on the landlord’s property insurance for your personal liability and belongings. If something happens to the neighbor’s property or a visitor because of your negligence, you will be responsible for the medical compensation and legal claims (if they sue you).

Guest Medical Expenses: Your guests can get injured while visiting your property. If that happens, you will be held responsible for their medical expenses. Landlord buys property insurance, which is limited to covering damage to the rental property. They won’t be held accountable for whatever goes on inside the property or happens outside.

Living Expense Coverage: If property damage is severe and the renter needs to relocate to another building until the property is repaired, the living expense coverage can be used to pay for their food, lodging, and relocation expenses. It’s temporary coverage that will cover your hotel bills, food costs, and all living expenses until your rental apartment is repaired.

 

How It Works

Renters insurance is purchased by tenants who rent an apartment, condo, or any property from a landlord. The coverage and policy limit can vary depending on the type of plan you choose and your monthly or annual premiums. As mentioned previously, renters insurance protects tenants from financial losses that might occur due to theft, damage to their belongings, or damage to someone else’s property.

What’s covered and excluded from the coverage depends largely on the type of renters insurance you buy. For instance, it can be confined to your personal belongings.

Also read: 5 Ways to Save Money on Commercial Property Insurance?

Comprehensive coverage might cover your liability. It’s best to calculate the estimated worth of your personal belongings to determine the best coverage.

Like any insurance policy, you should file a claim as soon as possible. The faster you apply for compensation for the losses, the lesser the chance your application will be rejected. Here’s how to file a claim:

  • Call your landlord immediately if there’s a damage to your property that requires repair.
  • File a case for theft or vandalism if your personal property is missing from your apartment and you suspect somebody broke into your house.
  • Store receipts for the repairs you have done on your end. For instance, contacting a locksmith for lock repairs or moving into another apartment because of safety issues.
  • Click the photos of the damage (if it’s visible) and collect all documents and any kind of proof that can help you with the claim.
  • Reach out to your insurance provider with the police report, proof of damage, and a claim form.

 

What’s Not Covered By Renters Insurance?

Renters insurance covers damages that occur to the property or renter’s personal belongings because of unpredictable events. Any damage from things that could have been prevented or are part of your basic home maintenance won’t be covered. For instance, bed bug infestation or any pest infestation is not included in the renter’s insurance coverage.

Like other insurance policies, renter insurance doesn’t cover flood damage. It does include water damage that occurs due to a broken pipe and plumbing systems, but flood damage requires a flood insurance plan. Likewise, the policy doesn’t cover your automobile. So, if your car was stolen while it was in the parking area in your rental building or it gets damaged, your renter’s insurance policy won’t cover the financial loss. You will need automobile insurance for your vehicles.

While the policy does cover your individual item, it might exclude certain things depending on your coverage limit. You should review your policy limit to know which items will be covered and what’s excluded.

 

Renter’s Insurance Vs. Landlord Insurance: How Are They Different?

Landlords buy insurance to protect the dwelling, roof, walls, fixtures, and other items that belong to them. As mentioned above, the policy doesn’t cover the renter’s personal belongings. The insurance might cover the medical expenses of the renter or their guest who gets injured while visiting the property, but that’s only when their coverage includes such injuries.

 

Bottom Line

Renter’s insurance is not mandatory, but highly recommended for tenants who live in a rental apartment. Theft, vandalism, and natural disasters are a few things that can happen to anyone. Since the landlord’s insurance won’t cover the financial damages, it’s best to have a renter’s insurance that protects you from such damages.