What Is Renters Insurance?
For most homeowners, insurance can be a “no-duh” requirement. But for renters, insurance is less of a definite addition to the monthly insurance bill. But as many know, life happens and there are many unexpected events that can occur and many situations that you just can’t prevent.
Investing in renters insurance is often far less expensive when compared to homeowners, and when you start adding up the cost of your personal belongings it just makes sense to have the coverage. If you still aren’t sure whether renters insurance is worth it, here’s a quick guide to the ins and outs of the coverage and why you should invest in it.
What Does Renters Insurance Cover?
Renters insurance is similar to homeowners insurance, though it doesn’t cover the dwelling or structure (unless it includes small changes a tenant may make to the structure.) The landlord or property owner is responsible for insuring the actual building. Renters insurance will include coverage of the tenant’s personal property against theft, vandalism and fire.
Renters insurance policies generally have four different kinds of coverage: personal property, personal liability, medical payments and property damage to others. Some policies also include additional living expenses.
All policies will include personal property coverage. This covers your belongings if they are damaged in a covered incident, such as theft or fire. Usually policies will have you choose a total amount that you believe your belongings cost. On average, a renter owns around $20,000 in personal property. Renters are also 25 percent more likely to be robbed than someone who owns a house. Personal property can include furniture, computers and other electronics, clothing, art, jewelry and even appliances.
Your property can be covered from situations such as fire; lightning; theft; damage from smoke, water-heating appliances or steam-heating; vandalism; weight of snow, ice or sleet; falling objects; freezing of plumbing, heating or air conditioning; short-circuit damage from electrical appliances; and even volcanic eruption. The great thing about renters insurance, too, is that it covers your belongings from anywhere in the world, whether in the trunk of your car or in your backpack in a German hostel. (Like homeowners insurance, renters insurance doesn’t cover flood or earthquake damage — this coverage must be purchased separately).
You can choose between two different kinds of coverage for personal property: replacement cost or actual cash value. Under replacement cost, your insurance company will reimburse you for the retail value of any items damaged or stolen. Through this you receive the full replacement value, not the depreciated value. Under actual cash value, you are only reimbursed for the current value of the item lost. Though this may not seem that great, these kind of policies are generally cheaper to buy.
Like all personal liability insurance — whether it’s auto, home, etc. — renters liability covers costs for legal action taken against you, such as if someone is injured in your apartment and sues you. It also can cover if you accidentally injure someone. Certain incidents, however, may not be covered so it is important to check every coverage situation in your policy.
Renters insurance also will cover medical payments — up to a certain limit — if a visitor or guest to your place is injured while on the property. Though many of us would like to say that our friends wouldn’t sue us for an injury that happens at our place, it happens. And it could even be a friend of a friend. Having this extra medical payment coverage can be a real help when the day comes that someone sues you.
Medical payments through renters insurance may not cover injuries to you or other household members, however, as your health insurance should cover those situations.
Property Damage to Others
Unlike homeowners insurance, renters insurance follows you wherever you go. If you are at another person’s home and you accidentally break or damage their property, your renters policy could help you pay for replacing it. This coverage is under the “property damage to others” section of a renters insurance policy and can be a great aide if you are a bit rambunctious, klutzy or haphazard.
Additional Living Expenses
Also like homeowners, if you are unable to stay at your place due to a covered incident (such as a fire or electrical hazard) your renters insurance will help cover costs to stay at a hotel or other lodging while you are waiting for damages to be fixed. This is usually called “loss-of-use” coverage, or also is known as relocation expenses or additional living expenses. This kind of coverage is available up to a certain limit; your insurer won’t pay for you to stay in a 5-star hotel for months on end.
Why Do I Need Renters Insurance?
Many renters may be unaware that a landlord’s insurance won’t cover them in the case of an incident. If there is a fire in the apartment, your landlord’s or manager’s insurance won’t cover the loss or damage of any of your items, it will just cover damage to the building or structure.
If you were to sit down and add up the cost of all your belongings, no matter how much you own, you probably would be surprised at just how much all your belongings are worth. So even if you live in a low-end place or an older building/house, it may be that your personal belongings are valuable. Think about your TV, phone, computer, and then throw in your bed, mattress, fridge, and all your clothes and shoes . . . the list goes on.
If a fire were to break out in your building you would not want to be stuck in a lurch without any personal belongings. You might have to spend thousands of dollars just to recover.
Is Renters Insurance Required?
Many landlords require renters insurance, though not all. No state or federal laws exist that mandate renters insurance is required. Landlords or apartment complexes could require you to obtain insurance in case someone is injured on the premises or if any damages occur from items you own (i.e. a waterbed.) Landlords also can require that you have liability insurance. It is important to note that if you have moved into a place that doesn’t require renters insurance, your landlord can legally and lawfully change the terms of agreement to require renters insurance.
This tends to happen when renters have pets or if the property has a pool. Don’t begrudge the change, though, it’s a big help and safety net not just for your landlord but for you.
How Much Does Renters Insurance Cost?
If you get a policy through Allstate or State Farm, you can expect to pay less than $200 annually for your coverage. Less expensive policies usually offer $10,000 in personal property coverage and $100,000 in liability coverage. If you’re still in the dorms, you may want to stick with a cheap policy. But for those who tend to shop at higher-end stores, you may want to consider getting a policy that covers up to $30,000 in personal property. Some bigger ticket items (such as an expensive engagement ring) may require a supplemental kind of insurance called a floater.
On a monthly basis, the national average for renters insurance is between $15 and $30 a month.
As mentioned above, most car insurance agencies will bundle your car and renters insurance, which can make it a lot cheaper. For many State Farm customers, it actually can be cheaper to get renters and car insurance together.
How to Get Renters Insurance
One of the best places to look at renters insurance is with your existing auto insurance agency. This is by far the best place to start. Of course, you will want to check to make sure that bundling your auto and renters will be cheaper than if you go with separate policies. Be sure to check and shop around before actually purchasing a policy.
If your auto insurance company doesn’t offer renters insurance, you can find many useful tools online to help you compare insurance quotes to find the right policy for you, your family and belongings.
Do I Need Travelers Renters Insurance?
Travelers is a specific insurance company that offers renters insurance along with auto, homeowners, condo, boat and yacht insurance. Their policies are similar to policies from other companies in that they cover damages to furniture, clothing and other personal items; your personal property, whether it is in your house or elsewhere (say the trunk of your car); and personal liability in case someone is injured on the property.
It is good to look around before you decide on a specific company to get renters insurance from, as Travelers or any other company may not have the best fit for you and your finances.
The great thing about renters insurance, whether from Travelers, State Farm, Allstate or elsewhere is that it will cover you on vacation. Renters insurance coverage is for you, not the insured location. The liability protects you, therefore it protects you wherever you happen to be. Renters liability will travel with you just as you travel and it will protect you no matter where you are. Because of this, there really isn’t anything called “travelers/vacation renters insurance.” It’s all packaged into one renters insurance policy.
Renters Insurance Quotes
Obtaining a renters insurance quote can be easier than you think. Back in the day, to get an insurance quote for your home, car or whatever would require paying an agent to do the research for you. Today, there are many companies that will give you a quote and even a quote comparison for free!
Companies like NetQuote will do all the hard work for you, and not charge you a cent. These kind of companies know that insurance is a big deal in our lives and can be our saving grace when “someday” finally hits. So stop waiting around debating if you still need renters insurance.