Imagine going on vacation for a week, then returning to the house you are renting and finding that you’ve been robbed! Your TV, laptop, jewelry, and other personal property are missing, and some of your furniture is broken. Are you able to replace it all yourself? If your answer is no, you definitely need renter (or tenants) insurance.
For some, this concept is not new. But others can face it for the first time. Let’s talk about what renter insurance is, what it covers and why it’s crucial to insure property in current conditions.
What Is Tenant Insurance?
Renters insurance is a policy tailored to shield renters from abrupt liability claims and ensure policy-specific risk and loss absorption. It is typically classified into four categories: individual items, liability coverage, extra accommodation costs, and medical bills of other people.
The policies can be used to safeguard any living space, like a mobile home or a studio. Tenants can extend their policies by including add-ons covering expensive clothes, accessories, and other high-priced objects.
Renters insurance is for people renting their home or apartment from a landlord. This insurance covers the tenant’s personal belongings, which is different from homeowners insurance because the building is not covered.
The landlord should have insurance that covers the structure, so that’s not the tenant’s responsibility. Some tenants mistakenly believe that the landlord’s insurance covers their belongings, which is not true and can cost a tenant a great deal of money.
When Can Renter Insurance Come in Handy?
If there is a fire, the landlord’s insurance will pay to replace the building, but not any personal belongings belonging to the tenant. The tenant will need renters insurance to replace their belongings if a flood or fire damages them or they are stolen.
Personal property protection is when tenants’ belongings are damaged during a fire or flood. Protection also reimburses for living expenses. Insurance can also cover the cost of other expenses, like if you must stay in a hotel while the apartment is fumigated.
Renters insurance can also help replace food if there’s a power outage and the food spoils. Liability coverage is available as well. That helps if someone is hurt in a tenant’s apartment and decides to sue for damages, they will likely sue the tenant and not the landlord. Liability coverage will pay the injured person’s medical bills if they are hurt inside the policyholder’s apartment.
By the way, if the renter’s insurance policy includes personal property coverage, it can help pay for the replacement of stolen items, even those that were outside your rent. For example, if your personal property (such as a tablet) is stolen from your vehicle, insurance can help pay for a replacement.
What the Renter’s Insurance Does Not Cover
- Own business. If you are a small business owner and something registered with the company was stolen from your home, the renter’s insurance won’t cover it. For example, your work phone may be considered a business property and, therefore, will not be fully covered by the renter’s insurance.
- Cars. Damage to your vehicle (including aircraft and watercraft) won’t be covered by the renter’s insurance, even if it is parked on your property. However, mandatory tenant insurance usually covers personal items in the vehicle.
How To Determine the Amount of Insurance
So how much do you need to formalize tenant liability insurance? The easiest way to determine this amount is to create a list of all your items along with their estimated value and calculate how much it will cost to replace them.
Did you miss our recent article on how renters insurance helps to deal with theft? Check it out here and see how it can help you protect your items.
You can choose between replacement cost or actual cost coverage. The replacement cost will pay you enough to replace the item at its current full retail price, whereas the actual cost policy pays only for what the item was worth when it was damaged or destroyed.
If you have extremely valuable items, it may be worth adding extra terms to your tenant insurance policy to provide super protection if valuable items are lost or stolen.
Why Does Renter Insurance Matter?
It’s pretty simple – if you’re renting a home and want to protect your property and avoid additional living expenses in an emergency, any renter’s policy is better than no insurance.
Insurance is valuable because it can protect you from financial disaster. How much would replacing your furniture, jewelry, and electronics cost? Renters insurance is a must for people who live in apartments. An accident, theft, or act of nature can occur at any time and require tenants to stand poised. Make sure you prepare for the worst.
Get the Most Out of Renters Insurance
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Victoria Berezhetska is a Content Lead at Phonexa.com and an expert contributor to American REIA. She has a Bachelor of Science degree in Business Administration, with extensive working experience as a PR specialist and content writer. At American REIA, she helps customers find the right educational material through easily digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers diverse topics around digital and insurance marketing, including auto, home, health, and life insurance.