Homeowners Aren’t The Only Ones Who Need To Protect Their Personal Possessions
Studies surprisingly find that 95% of all homeowners ensure that they have a homeowner’s insurance policy, while only 37% of renters have a renter’s insurance policy. One of the common misconceptions amongst most renters is that they don’t own much to warrant a renter’s insurance policy. But have you stopped and considered the value of everything you own? Do you have enough money to replace your expensive clothes, jewelry, and art if a burglar breaks into your apartment and “borrows” them? Renters insurance is an essential safety net in case of a disaster. What’s more, renters insurance is affordable – the average policy cost is $187 per year.
Top Reasons to Get Renters Insurance
One of your main goals is to build a financial safety net, right? You have car insurance, health insurance, and life insurance. But do you have renters insurance? Some things are simply beyond your control, even when it comes to your own space. With this in mind, you may want to secure your property and belongings. Renters insurance will cover your personal items from damage and loss.
Surprisingly, while 95 percent of property owners have homeowner’s insurance, just 41 percent of renters have a renter’s insurance policy, according to the Insurance Information Institution Poll. “Most renters incorrectly assume that their landlord’s insurance covers them.” Says Investopedia author Steven Richmond, “which is wrong because they can be held liable for damages or injuries.”
Below are five key reasons why you should consider a renter’s insurance policy:
1. There is more value in your personal possessions than you may think
A renter’s insurance policy will protect you against loss to your personal property, including computers, jewelry, luggage, electronics, and furniture. While you may not own much, the value of your personal items can add up quickly. The average American renter has personal property worth approximately $20,000.
2. Other peoples actions are out of your control
When living in an apartment, you won’t get to choose who your neighbors are, and sometimes, they can be careless. However, you can control the outcome if they destroy your personal items. For instance, when your neighbor upstairs leaves their overflowing bathtub and water damages your properties, your renters’ insurance will send a team over to help with the cleanup. In the case of extensive water damage, they will pay additional temporary costs of living, as your apartment may be unlivable. What’s more, they will compensate you for damages to your personal property.
3. You can get relatively cheap renters insurance
According to a recent report by the National Association of Insurance Commissioners (NAIC), the average monthly premiums for renters insurance range between $15 and $30. However, this will mainly depend on the size and location of your rental unit and the value of your personal possessions.
4. Coverage includes more than just your personal possessions
Your renter’s insurance policy covers not only your personal property but also other things that may occur and be beyond your control. A typical renter’s insurance policy will provide liability coverage of over $100,000. This will provide you with protection should someone get injured while in your home, or when you or another covered person accidentally injure another person. Additionally, a standard renter’s insurance policy will pay for any court judgments and legal fees.
5. Most landlords require you to have renters insurance
Your landlord’s property insurance only covers the structure and the ground, but it doesn’t cover your personal property. Although renter’s insurance isn’t required by law, most landlords today will require you to purchase it and will want to see proof. This can either be your landlord’s idea or an order from the landlord’s property insurance. This is because when you’re covered, your landlord may no longer be responsible for certain things.
How much is your stuff worth?
When purchasing your renters’ insurance cover, you have a couple of choices to make. How much is the value of your property? Which possessions do you need to be covered? You will also have to decide between an actual cash value policy or a replacement cost policy. You will learn more about the two in the next section.
Renters Insurance Coverage:
First things first, you want to know what renters’ insurance actually covers. Renters’ insurance will cover your damaged, lost, or stolen personal possessions, as well as any additional living expenses. Renters’ insurance will also cover for injuries that may occur in your rental home or apartment. For instance, when someone gets injured in your home, and it is determined that it was your fault, the other party may file a liability claim with your renters’ insurance company.
Coverage: Personal Property
Think about what you own. Personal property coverage is a component of renters’ insurance, and it will cover the cost of replacing your personal items in case they are unexpectedly ruined or damaged. This type of protection applies to some perils, including:
- Falling objects
- Hail & Windstorms
- Freezing plumbing systems
- Volcanic eruptions
- Fire & Lightning
- Civil commotion or Riots
- Water damage from pressure from plumbing appliances
- Damage from your cooling and heating systems
- Damage from the weight of sleet, ice, or snow
- Damage caused by vehicles and aircrafts
- Accidental cracking, tearing, burning, bulging, or tearing of hot or steam water heating systems
However, it’s important that you remember that typical renters’ insurance doesn’t cover damages caused by floods or earthquakes. Therefore, you will have to replace your possessions if they are destroyed by earthquakes or floods. If you live in a flood or earthquake-prone area, you will need a separate policy. You can also add earthquake coverage as a rider to your policy.
It’s also important to note that the value of some items is capped in order to make your renters’ insurance more affordable. Some high-value items such as artwork, jewelry, firearms, furs, and other collectibles have a higher cap. These amounts will vary, but most policies set it from $200 to $2,500. Therefore, if you have personal items that are in these categories and their value exceeds the limit, you should purchase a policy rider to increase your coverage levels.
There are two types of renter’s insurance policies that you will have to choose from – replacement cost and actual value policies. These types of renters insurance refer to how an insurance company values property.
Actual cash value
In this case, your insurer will take depreciation into account in determining the value of your property so that your insurance company will pay only the value of your possessions at the time of loss or damage. Therefore, if you have a 5-year-old TV, your compensation will be for the market value of a five-year-old TV.
Under this policy, you will be compensated for the face value of your belongings. For instance, if your TV is destroyed, your renter’s insurance company will replace it with a new TV of the same brand, size, and quality. This is regardless of the age of your TV at the time it is destroyed.
A standard renters’ insurance policy includes liability coverage. This means that your insurance will protect you if someone gets injured while in your property, or when you or another covered person accidentally injures another person. Additionally, your insurer will pay for all court judgments and legal expenses.
If, for example, your guest trips and falls onto an object in your home, your liability coverage will help cover for legal costs. Even for accidents that occur outside your home, your renter’s insurance liability protection will protect you. For instance, if your child throws a ball outside, and it injures your neighbor, your insurance will cover their medical bills.
Additional Living Expenses
Whether you’re renting an apartment or a house, you will have a place that you can call home until the lease expires. But what will happen if your home is damaged by fire and becomes uninhabitable? With renters insurance, you will get compensated for additional living expenses. This coverage will help pay for additional costs that you may incur, like hotel bills or the high cost of food.
Coverage: Medical Bills
You now know that renters insurance will protect your personal belongings. You may also know that it won’t cover your prescriptions and doctors’ visits; you will need a health insurance cover for that. However, if a guest is injured on your property, and they seek medical attention, your renters’ insurance will pay for their medical treatment regardless of whose negligence. This might include surgical procedures, hospital stays, dental expenses, and x-rays, among other medical related costs. Your insurer will cover their medical expenses as a result of the injuries sustained up to the limits of the coverage.
Things NOT Under Coverage:
Although a standard renters’ insurance plan will provide you with liability and personal property coverage, it won’t protect you from all potential risks. For instance, property destroyed by floods won’t be covered. Additionally, coverage for cases related to dangerous dog bites is also excluded. At other times, coverage is limited for some high-value items like jewelry. Here is a list of some common exclusions in a standard renters insurance policy.
Physical Living Structure
While a renters insurance can help protect you in various ways, it won’t cover the physical structure you’re living in. Your landlord should have property insurance to protect their property. You, on the other hand, are responsible for protecting your belongings. Likewise, your landlord’s property insurance cover won’t extend to you.
A typical renter’s insurance policy won’t cover earthquake, flood, or damage from other natural disasters. However, some companies can offer coverage in case of floods, earthquakes, or other natural disasters as an add-on which will require you to pay more. Therefore, if you live in an area at high risk of such perils, you may have to purchase a separate insurance policy for your personal property.
One of the experiences that most renters dread and hope not to ever deal with at home is a sump pump failure. When a sump pump fails, it causes water to back up. When this happens, you can expect all kinds of waterborne materials to get into your home. Most of the time, a water backup will create costly damage, and you will have to arrange for repairs and clean up quickly.
Unfortunately, water backup is not included in your renters’ insurance cover. However, it’s an optional endorsement that you can add to your insurance policy. Without this endorsement, you would have to cater for the cleanup and damages caused by the sump pump or other equipment that isn’t considered as part of the plumbing system.
Your Roommates Items
A standard renters’ insurance policy won’t cover damage costs that are associated with your roommates’ possessions. For them to be covered, they should be listed on your policy whereby you share the costs of the renters’ insurance.
Intentionally Damaging Your Property
If you intentionally damage your possessions, your renters’ insurance company won’t provide any benefits. When you file for claims, your insurance company will first conduct an investigation. The good thing is that your policy will extend to damage caused to other people’s properties–for instance, when your active kids break a neighbor’s window or destroy their property.
If you own a car, it won’t be covered by your renters’ insurance if it is stolen or gets damaged. You need comprehensive car insurance policy coverage to be compensated. However, your personal belongings in the car before the time of theft will be covered by your renters’ insurance.
Pests & Rodents
A standard renter’s insurance policy won’t cover damage costs that are associated with rodents and other pests. Bed bugs and rodents, along with other pests, are considered a maintenance issue.
College Students & Renters Insurance
When packing for college, you have a lot on your mind. You’re thinking about clothes, the perfect laptop, smartphone, digital camera, and gaming console, among other items. Renters’ insurance is the last thing on your mind. Whether you’re planning to stay in a campus dorm, lease an off-campus apartment, or rent a house, it’s important that you protect your personal items by purchasing a renters insurance policy. The need to protect your property through renters’ insurance will mostly depend on where you will be living.
If you’re living on-campus and you’re below 26 years, you will be covered by your parents’ homeowners or renters insurance. However, both policies have a cap on the amount payable for off-premises coverage. For instance, if you make a claim, you will be limited to about 10 percent of your parent’s coverage. This means that if your parent’s renters or homeowners insurance cover has $100,000 coverage for their home, you will be covered up to a maximum of $10,000, which is after you pay the deductible.
If you decide to rent an off-campus house, apartment, or condo, you should have your own renters’ insurance policy. You aren’t eligible to get coverage from your parents’ renters or homeowners’ insurance policy.
Factors that can affect your premiums:
- The location of your home
- Your credit score
- How safe your neighborhood is
- The size of your property
- Your alarm systems
- Your history of insurance claims
- Your deductible
- The amount of coverage you have
Renters Insurance Can Be Affected By Your Dog
If you’re a student, tenant, and dog owner, renters insurance is the most affordable way to get liability coverage. Your insurance cover may come in handy if your dog bites someone or causes damage to property.
While most dog breeds are covered by a standard renter’s insurance policy, some dog breeds are excluded. This means that they won’t cover the cost of damages or injuries caused by your dog. Some dog breeds are excluded from renters insurance because of their likelihood of causing damage. Some of the dog breeds excluded from a renters’ insurance policy include:
- Great Danes
- Siberian Huskies
- Pit bulls
- German Shepherd
Scenarios for Students:
Don’t think that because you’re a student, you’re too poor to have possessions worth protecting. Most students that reside off-campus have property worth thousands of dollars, such as computers, electronics, furniture, clothing, bicycles, and textbooks.
Jane was at the library finishing up her assignment that was due the next day. She had been busy the whole day and decided to take a restroom break. She left her iPhone and laptop on the table, and when she returned, they were missing.
Their renter’s insurance coverage:
Luckily, Jane had purchased an actual cash type of renters’ insurance. When she went to make a claim, the insurance covered the loss, but it only paid her $900 for her laptop and $300 for her iPhone, because they had depreciated in value since she purchased them.
John has rented an apartment off campus, and he owns a 55-inch TV worth $2,000. In the evening after classes, he accidentally started a grease fire, which spread and destroyed his TV.
Their renter’s insurance coverage:
John had purchased a replacement cost type of renters insurance. Therefore, the insurance company covered the cost of replacing it with a new TV worth the same amount and of a similar brand.
Water Damage Example:
Liam lives in an on-campus dorm. One day after classes, he was playing with his friends in the dormitory hallway. He accidentally hit a sprinkler head with his ball, causing the sprinkler to go off. The water damaged most of his floormates’ electronic devices.
Their renter’s insurance coverage:
Liam’s renters’ insurance policy covered the damage to the building and the damage caused to the other students’ electronic devices.
What Parents And Students Should Know
College-bound students take a piece of their parents’ hearts when they leave. They also carry a lot of other stuff. To protect your child’s expensive gear, the first thing you should do is to consult your insurance company before you review the following:
Parents’ policy for homeowners insurance
Most homeowner’s insurance companies will provide financial protection for your college dependent while they’re at school. Your homeowners’ insurance will extend to your child as long as they are enrolled full-time, they were residents of your household before they left for college, you are related, and they are under the age of 26. However, most homeowners’ insurance policies will only cover those who live in an on-campus dorm room, and they only cover 10 percent of the insurance policy limit. If the student decides to live elsewhere, you may need to purchase renters insurance cover. In order to understand what’s covered and what’s not covered; ensure that you talk to your homeowner’s insurance company.
Make a list of all possessions that will be covered by your renters’ insurance. Make a copy and store it in a safe place. Remember to always update it to eliminate things you may have replaced, and add items you have purchased. If possible, also take photographs of your items. Photographs will help you stay organized, and they will demonstrate the general condition of your items. Also, create a log book with receipts and serial numbers for as many items as possible. This will come in handy in case your expensive items are stolen.
Scheduled personal property
Your standard homeowner’s insurance policy won’t cover all types of properties. Additionally, they have a limited value amount for specific losses. Therefore, to cover possessions that have limited coverage, like jewels, antiques, furs, artwork, and gold coins, you will need to purchase additional coverage referred to as scheduled personal property.
A Renters Insurance Decision Checklist
A common mistake that many renters make as they shop for an insurance policy is that they purchase the cheapest policy, without fully understanding the details. They also often purchase their policy from the insurance company they know best. However, it’s important that you compare different renter insurance policies before you purchase your policy. Insurance companies consider various factors to price their premiums. Some of the factors an insurance company will use include location and type of dwelling, among other factors. Therefore, a cheap renters’ insurance cover may not always be the best option for you. Before you purchase your renters’ insurance policy, first ask yourself these questions:
How much coverage will you need?
First, take a look at your personal belongings. To determine how much coverage you need, you will have to add up all your belongings and use that as your estimate. Additionally, you need to make sure that the limit of your renters’ insurance is enough to cover the replacement of your belongings in case the unexpected happens. Get help from an agent to factor in how your location can affect the cost and any added coverage you may need.
What type of deductible is in your price range?
A deductible is the amount of money that you will have to pay out-of-pocket before your renters’ insurance can kick in. Deductibles are available as a specified amount, and the larger your deductible, the lower your renters’ insurance premiums. However, depending on your insurance company, your renters’ insurance deductibles will range anywhere between $200 and $1,000.
Sometimes it can be tempting to choose a lower deductible because you won’t have to pay much when filing for a claim, but this isn’t always the right move. When you choose a higher deductible, you will pay more upfront in case something happens, but you will pay lower monthly premiums.
What incidents are covered?
Your renters’ insurance policy will cover you against losses from lightning, fire or smoke, vandalism, windstorm, explosions, theft, and some types of water damage (for example, when a neighbor leaves their water running, and it floods your apartment).
What are the types of policy riders and floaters available?
If you have expensive furs, jewelry, collectibles, musical and sports equipment, then you should consider adding a floater to your renters’ insurance policy. This is a separate policy that will provide you with additional coverage in case your valuables are stolen or lost.
Will natural disaster coverage be necessary?
You should consider natural disaster coverage if you live in tornado, earthquake, and flood-prone areas. Your renters’ insurance will most likely sell these policies separately.
Do you want actual cash value coverage or replacement cost?
The main thing that you should understand about the two types of valuation is that replacement cost policies will pay you for your damaged or lost items a higher amount than the actual cash value policies. However, the premium for a typical replacement cost policy will be a bit higher. Before you decide which option is right for you, first consider how much it would take to replace your possessions.
Will extra liability coverage be something you need?
Liability coverage is included in your renter’s insurance policy. It will help you cover costs due to other people’s property damage and accidental bodily injuries. Your liability coverage also covers lawsuit and medical expenses, which can quickly pile up. In case you need more liability coverage, you should purchase a personal umbrella liability policy. This policy will kick in after you reach the limit on your renter’s insurance liability.
Optional Add-Ons & Floaters
Sometimes a standard renter’s insurance cover won’t cut it. Fortunately, you can protect your expensive personal items by purchasing optional rental insurance floaters. These additions will give you a bump in your coverage and ensure all your property is protected. What’s more, apart from upping your coverage limits, they may also protect you in situations where your basic renters’ insurance doesn’t cover you, for instance, in case of identity theft, earthquakes, and damage from pets.
Add-On or Policy:
Who needs this and why?
- Contents Replacement
- Scheduled Personal Property
- Extension for Identity Theft
- Coverage for Drain/Sewer Back-up
- Coverage for Business Merchandise
Ideal for all renters as it covers all the costs involved in repairing and replacing personal property without depreciation or any deductions.
It adds coverage for expensive items such as jewelry and antiques. It also covers other causes of loss not covered by standard renter’s insurance covers.
This add-on will cover for lost wages and all legal work in case your identity is stolen.
A standard renter insurance cover doesn’t protect you from some types of water damage. If you live in an older home, you can benefit from such a policy add-on.
If you run your business outside your home like selling items on online platforms like eBay, a business merchandise cover can protect your livelihood.
Subletting and Renters Insurance
The tight rental market has led to an increase in subletting rooms and apartments. Subletting favors both students and working professionals. By subletting your room or apartment, you get to keep hold of your residence and still keep the rent paid. However, before you sublet your apartment or move in as a subtenant, there are a few things that you should know:
Notify your landlord in writing
Before you sublet your apartment, ensure that you have read the lease agreement to ensure that it’s an option. If it’s ok, then you will need to obtain permission from your landlord – and you should do this in writing. Ideally, you should notify your landlord of your intentions at least one month before.
Make sure your subtenant has rental insurance
Your renter’s insurance policy only covers your possessions from damage and theft. However, if you sublet your apartment and your Sublessee takes your property, your insurer won’t pay because you invited the person to live in your apartment. To be on the safe side, keep your renters’ insurance cover while you sublet your apartment, but still require your sublessee to purchase their own renters’ insurance.
Evaluate your own rental policy
Before you can sublet your apartment, call up your renter’s insurance company, and inform your agent that you want to sublet it. Your agent may approve or deny your request. Because subletting your apartment increases liability, you may have to purchase a landlord insurance policy. This policy will cover you for lost rental income, lawsuits for bodily injury, and damage on your property.
Screen your tenant
It’s important to request a background check to confirm that potential tenants have never been evicted or arrested before and that they aren’t lying about their identity. You will also need a tenant that can pay rent reliably, and the best way to determine if someone is able to pay their rent is by getting a sense of their monthly income and employment.
Read the lease agreement
Before you sign the sublease agreement, ensure that you see the master lease. This is very important because you will be bound by certain provisions in the master lease. Moreover, any subtenancy has to be approved by the master landlord.
Purchase renters insurance
When you sublet, it’s important that you purchase renter’s insurance. Most subtenants mistakenly believe that if something was to happen, the landlords’ property insurance or the original tenant’s renters insurance will cover for their losses. But that’s not the case.
Using Your Insurance
Your rental insurance covers unexpected losses or damage to your personal belongings. Therefore, if you lose your property through fire, some types of water damage, or theft, you can file for a renters insurance claim. To ensure that you’re better prepared in case of any peril, the following steps will guide you on what to do, and also help you receive your compensation soonest possible.
The Steps: Before Something Happens
Creating an inventory of your home
Any theft, damage, or loss of your items should be covered by your insurance policy. But the only way to determine what you have lost is by taking a home inventory. In your inventory, include the purchase price of your items.
Document your inventory by gathering your receipts
Videotape your home as you walk through each room or take photos of all your items to get a complete account of all your belongings. Record the serial numbers of all your electronic equipment and appliances. Also, record the date of purchase.
Be sure to purchase a renters insurance policy
After determining the value of your personal property, get in touch with a rental insurance agent to purchase your policy. If you own any kind of expensive jewelry, artwork, coins, or valuable music equipment, you should get them appraised and get additional insurance.
Keep your documents, policy, and inventory in a safe place
If you have prepared a digital inventory, you can store it in the cloud or on a memory stick. However, if you have a written inventory, you should print it and attach pictures and receipts. Store your inventory in a fireproof safe, a safety deposit box, or with a friend. Let a family member know where you’ve stored your home inventory.
The Steps: After Something Happens
Report to the police any criminal activity
In the event of burglary, theft, or vandalism, ensure that you contact the police immediately. Reporting the crime to the police is required before you can file an insurance claim. A police report won’t only act as proof, it also makes the claim process smoother. Remember to get the names of the police officers you talk to, just in case your insurer needs some answers.
File your claim with your insurance agent or company
Aside from contacting the police, you will also have to contact your renters’ insurance company after the event. Contacting your insurer will help you determine whether your loss is covered. Additionally, all renters’ insurance companies have a deadline for filing claims, which ranges between 48 and 72 hours after the loss or damage of your property.
Make sure to keep your receipts
Your renters’ insurance cover will do much more than just compensate you for your lost or damaged property. It will also pay for your motel if your home becomes inhabitable. However, you need to keep the receipts for your motel room and any other receipts of expenses you incur, such as meals.
Additionally, your renters’ insurance covers medical bills if you and others in the apartment are injured, and you were not at fault. To get compensated, always save all medical bills and receipts you get from treatment.
Work with the claims adjuster
It’s important to document your damaged property. Take a video and photos of everything damaged. Also, don’t throw away any of your damaged items until a claims adjuster from your insurance company comes to inspect your property. Although an insurance adjuster isn’t needed in case of low-value items, you should keep all records and have a personal inventory ready until your insurance company communicates to you.
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