03 Mar Renting? You Still Need Insurance
Almost everyone who owns a residence carries homeowners insurance to protect their home, their possessions, and any injuries sustained by visitors to the residence. However, mortgage loans often require homeowners insurance as a condition of loan approval. But what if one is renting or leasing their home?
Throughout this article, we will give you all the information you need about renter’s insurance – what it is, how it works, and what it does and does not cover.
What Is Renters Insurance?
Renter’s insurance provides coverage and protection against liability claims for the insured’s personal property. The policy covers injuries caused by something other than a structural failure at your rental. It is the landlord’s responsibility to handle structural problems in the rental unit. A renter’s insurance policy also protects anything from a studio apartment to a house or mobile home.
Who Needs Renters Insurance?
To obtain renter’s insurance, you must live in a rented house, flat, apartment, etc. Renters insurance is not a requirement for all tenants. Still, it will only be required if your landlord or property management company demands it from you. Landlords can make renters insurance mandatory for their tenants to decrease the risk of being held liable for damage to their rental properties or liability claims. It’s pretty common for renters insurance to be required by landlords, but, fortunately, there are many insurance companies offering renters insurance that let you compare quotes and purchase a policy online.
Renters Insurance Coverage
Renters’ insurance provides coverage for unexpected events as a result of the coverage of the policy. There will always be things that you can’t prevent, such as theft, break-ins, and visitor injuries, no matter how careful you are. That’s why renters insurance is so important.
There are different types of coverage included in a renter’s insurance policy. Some of the most important coverage is:
The contents of your rented residence are covered under this policy. In most cases, the risks known as named perils include fire, theft, vandalism, plumbing and electrical malfunctions, certain weather-related damages, and other perils. An HO-4 policy, as it is called, is a standard policy for renters. It will cover losses to personal property from events such as hail, explosions, riots, damage caused by aircraft or vehicles, vandalism, and volcanic eruptions, among other things. However, no coverage is provided in the case of floods and earthquakes, and separate insurance coverage is required.
Liability coverage protects you from being sued for injuries sustained or damages caused to your home by others up to a certain amount. It also covers you, your family, or pets if they cause damage to other people. Any court judgment and related legal expenses are covered up to a specified limit, usually $100,000 but can go up to $300,000. To get higher coverage, you would need to purchase an umbrella policy.
Under the temporary housing coverage, if something occurs to your rental unit that makes it uninhabitable due to one of the covered perils, then you will be provided with funding to pay for temporary housing. You are covered for your hotel bills, meal expenses at restaurants, temporary rentals, and other costs incurred during the renovation of your home.
How Much Is Renters Insurance?
The average American household spends $168 a year or about $14 a month on renter’s insurance, according to the latest rate analysis conducted by NerdWallet (an American personal finance company). According to our estimate, a 30-year-old hypothetical resident with $30k in property coverage and $100k in liability coverage will pay a $500 deductible.
What Renters Insurance Doesn’t Cover
Most renters’ insurance policies do not cover property damage costs due to all kinds of perils. Some specific perils, like earthquakes, riots, and pest infestations, are not covered under renters insurance at all–, or they are covered in minimal amounts. There are limited exceptions to this rule, but most renter insurance policies will not cover damages caused by bed bugs.
How to Purchase Renters Insurance
Although buying renters insurance may seem complicated at first, it is actually quite simple. Here we will walk you through the steps you must take to obtain:
Evaluate How Much Renters Insurance You Need
Suppose you were renting an apartment, condo, or house, and some sort of damage had hit your building – perhaps a pipe burst, smoke seeped in from a nearby fire, or you came home to find you had been robbed. In the event of such incidents and similar ones, you might find yourself scrambling to assess what has been damaged or lost. You might be forced to relocate temporarily and drain your savings account. If your belongings are stolen or damaged, your landlord isn’t liable for the damage or theft. For this reason, you need a renter’s insurance policy to protect your stuff (and you from certain types of legal liability) while living in a rental house.
To determine how much renter insurance you need, you can visit the Insurance Information Institute’s website (an organization that helps consumers conduct their own research and evaluate the insurance industry).
Choose an Insurance Company
When shopping for renters insurance, insurance company websites can provide you with lots of valuable information, including where a company operates and what standard coverages are available. Even though the cost of renters insurance varies significantly by region, many companies offer online estimating tools so you can determine what amount and what type of coverage you’ll need.
Although doing your research is important, you should also consider getting some help from a licensed insurance agent to provide that service. The insurance agent can advise you on which type of coverage to buy, as well as how much it will probably cost. Some agents work only for one company, and they can only provide you with information and quotes about that company. Alternatively, independent agents could search online and receive quotes from many companies. No matter what agent you use, it’s a good idea to check out their background to make sure they’re reputable.
If you are seeking reviews and complaints about insurance companies, please visit your state insurance agency’s website, as well as the website of the National Association of Insurance Commissioners (NAIC).
Here is the list of some well-known insurance companies through which you can buy your renters insurance:
Apply for the Policies You Like
Once you have found an insurance company, you can then search for a policy that matches your needs and budget.
To apply for a renter’s insurance policy, you should keep in mind the following points during the application process:
- A personal property policy replaces your belongings in the event of theft or damage caused by a covered disaster.
- If you injure a guest or damage someone else’s property while someone is visiting your home, you are covered under liability insurance.
- The medical payments coverage covers the less expensive medical bills associated with injuries sustained by guests at your home, no matter who is to blame.
- In case your rental house or apartment is damaged in a covered disaster, you will have the option to purchase loss of use coverage (also called “additional living expenses”), which will pay for expenses related to staying in a hotel or eating in a restaurant while your rental is being repaired.
When you are getting quotes for renters insurance, make sure you enter the same limits for each type of coverage to compare the quotes directly.
Choose the Right Policy for You
The cost of renters insurance is relatively low compared to other types of insurance. A renters policy can cost as little as $12 a month for up to $30,000 of coverage for personal property, as reported by the Independent Insurance Agents and Brokers of America, Inc. (IIABA). In other words, you’re getting good coverage for less than the price of a couple of cups of coffee a week.
Below you will find some helpful tips for choosing the right renter’s insurance policy.
- Finding the Right Coverage Amount
- Knowing What’s Not Covered
- Understanding Different Types of Coverage
- Consider bundling your renter’s insurance policy
- Opt for a Higher Deductible