Friday, February 16, 2024
So you found the perfect rental. The view is amazing and after a little shopping splurge, you’ve filled it with some pretty incredible furniture and artwork. It feels almost too good to be true, and it has you thinking: What if something happens to your rental? What if there’s a kitchen fire, say, or a pipe breaks? Who has your back now?
That’s where renters insurance comes in. At the most basic level, renters insurance exists to protect people when something unexpected happens to their home. But there are nuances to the policies, and various types to choose from. Which coverage is right for you? Use this renters insurance guide to learn the why, how, and what of renters insurance coverage and arm yourself with the information you need to purchase your policy.
What does renters insurance cover?
Renters insurance protects your belongings, but not the building itself (your landlord has insurance to cover the structure and any furnishings provided with the rental), in the case of a catastrophic event such as a home fire. It may also kick in to help cover the cost of additional living expenses, such as hotel bills, if you have to move out while your home is being repaired.
Renters insurance also protects you by offering liability coverage. Say, for example, a guest staying at your rental home trips, strikes her head on your coffee table, and requires medical attention. If you’re in the US, you might normally be on the hook for covering those medical bills. But your renters insurance policy will help with these costs.
Why you need renters insurance
It might seem like overkill — paying for coverage from a fire that’s unlikely (you hope!) to ever happen. But take a quick mental inventory of your belongings. Start with the most expensive items you own: your laptop, television, furniture, and other items that were an investment to purchase. Do you have enough cash to replace these items if a disaster destroyed everything in your apartment today? Suppose a guest at your holiday party is seriously injured, can you easily manage medical and legal costs? For most people, the answer is no, which is why you need renters insurance.
In a nutshell, renters insurance is used to:
- replace your belongings if they’re lost, stolen, or damaged
- protect you (and your assets) if an accident occurs and you’re liable for damages
- help cover the costs of additional living expenses while your rental home is being repaired from an event like a fire
What is a covered loss?
A standard or basic renters insurance policy clearly states what events or disasters qualify as situations in which property loss will be covered. The Insurance Information Institute lists the following events as covered under standard renters insurance policies: Smoke, fire, lightning, vandalism, theft, explosion, windstorm, and certain types of water damage (e.g., a burst pipe).
What events aren’t covered?
Most standard policies don’t cover floods or earthquakes. However, you can purchase flood insurance through another provider, such as the National Flood Insurance Program. Earthquake coverage may be purchased separately or added to your policy, depending on where you live; these policy additions are called riders, floaters, or endorsements.
Different types of renters insurance
Everyone’s needs are different, so you’ll want to do your homework. Depending on your living situation and finances, you may decide you need more coverage for your personal assets and less coverage for home injuries, or vice-versa. Renters insurance offers three types of coverage: Personal property, liability, and additional living expenses. Here’s what you’ll get from each type of coverage
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