Why Renters Insurance Is Important
Renting your own apartment or house is an exciting change. You get to decorate how you like, make the space your own, and even control the thermostat. But, as a renter, there are some steps you need to take to protect yourself and your belongings.
Renters insurance can provide critical protection, but it's often overlooked — since it generally isn’t required, unlike homeowners insurance, which lenders require in order to carry a mortgage. Just 55% of renters have a policy. That means nearly half of tenants are taking a high risk of suffering perils that aren’t covered in other ways, such as in their landlord’s insurance policy.
Here’s what renters insurance covers and costs, and some advice on how and why to buy it.
What renters insurance covers
Renters insurance is a type of coverage you can buy when you're renting an apartment or house. These policies usually include three main areas:
- Personal belongings: This covers you if your clothing, electronics, or other items are stolen or damaged by fire or vandalism. The same applies if what you own is damaged in a windstorm or many other weather events. You may even be covered for losses of personal items while on vacation, although there may be limits on such coverage.
- Liability coverage: If someone suffers a bodily injury, including a dog bite, while visiting your home, liability coverage may reimburse them for their pain and suffering, medical expenses and lost wages (and can help with your associated legal expenses).
- Additional living expenses: If your rental unit suffers property damage due to a covered loss, and you're unable to live there, this coverage can cover a portion of additional living expenses you incur while it's being repaired. Coverage for additional living expenses can help with hotel bills or temporary housing, and storage unit rentals.
Some companies, including Amica, offer additional endorsements to enhance your coverage. You can use these additions to get supplemental insurance for specific items.
For example, if you have an expensive family heirloom ring, you may need to purchase scheduled personal property coverage to ensure the ring is properly covered. Or, if you're worried about identity theft, you can add identity fraud protection to your policy.
You also have options on how much you'll be reimbursed. If you opt to pay extra for replacement cost coverage, you'll receive the total cost to replace the item at the current market price. Without this coverage, you would be reimbursed for the actual cash value of the item, which is calculated by taking the replacement cost value and subtracting the depreciation amount. By opting to pay for replacement cost coverage, you can help minimize additional out-of-pocket costs.
Why renters insurance makes sense
Renters insurance isn't something you should forgo, for several key reasons:
It's cheaper than you may think
If you’re on a tight budget, renters insurance may seem like an unnecessary expense. However, it costs less than you may think. At Amica, the average premium ranges from about $13 to $30 a month. By gaining the extra protection for both your personal property and yourself, you'll minimize the potential for costly out-of-pocket expenses in the event of a loss.
It protects your belongings
Even if you don’t own the property you live in, you’re at risk of losing the possessions you keep there. A renters insurance policy covers your items in case of perils such as:
- Theft: If your apartment is broken into and your laptop, headphones or TV is stolen, renters insurance can reimburse you the money you’ll need to replace your belongings.
- Fire: If a fire breaks out, renters insurance will help cover the damage to your property, including your furniture and clothes.
- Water: If your unit’s hot water heater starts leaking or a pipe bursts, renters insurance will pay for the cost to repair or replace your possessions that have suffered water damage. (However, a renters policy will not protect against natural flooding. For that coverage, you'll need a tenant’s flood insurance policy.)
Accidents can happen
Renters insurance isn’t just for damage to your own belongings; it also protects you if someone is hurt on the property (or injured by your pet).
For example, if a guest falls in your kitchen and breaks their leg, or your dog dashes into the yard and bites a visitor, renters insurance could cover your legal bills, the associated damages and medical bills.
Renters insurance steps and tips
When you purchase renters insurance, these steps can help you make the most of your policy:
Create a written inventory
Make a list of the furniture, electronics, clothing and other possessions you own. Write down the items with a brief description like “40-inch flatscreen TV from Samsung” or “Nike sneakers.“ Those details will help should you need to file a claim.
Shoot photos and videos
It’s wise to supplement your written inventory with images of your major possessions, from furniture and electronics to clothes and accessories to dishes, pots and pans, and bed linens. To document all that you own, do a walk-through tour of your rental, recording video or taking photos as you go. That way, if you need to make a personal property claim on your renters insurance policy, these digital representations would jog your memory and remind you what you owned and lost.
Keep receipts
When you make a major purchase — such as upgrading your television or couch — take a snapshot of your receipt. If your items are damaged in a fire or another covered incident, those snapshots can come in handy when you file a claim, ensuring you are reimbursed the proper amount.
Ask about discounts
Many insurance companies offer reductions on your renters insurance premiums. Contact your insurance agent or insurance company to see if you're eligible for discounts for bundling (say, getting your renters insurance and auto policy from the same insurer), installing a security system, or pre-paying your policy far in advance. (Any or all of these may not be offered by your insurer, of course.)
This story was created in partnership with Money.com.
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