Understanding what renters insurance is at first can be confusing. Most people know homeowners carry insurance to protect their property, belongings, and any visitors who might get hurt. But what about people who rent or lease the place where they live?
Here are a few things you need to know about renters insurance, including the usual questions people ask about this matter. But first, let’s see what’s the meaning of renters insurance.
Renters insurance is a type of property insurance that protects against liability claims and covers losses to personal property. This includes injuries in your rental that aren’t caused by a problem with the building itself.
Renters’ insurance can protect a studio apartment, a whole house, or a mobile home. So, getting renters insurance might be a good idea even if you’re starting or have only lived in a place for a year.
It’s probably the cheapest and most accessible insurance you’ll ever have. You might not think you have much value, but you probably do — more than you could easily afford to replace if your home was broken into or burned down.
Renters insurance is similar to homeowners insurance in terms of what it covers, except that it doesn’t cover the house or other buildings.
The Policy It Covers
- Actual Cash Value (ACV): Your things are only insured for what they are worth right now.
- Replacement Cost – Covers the cost of buying new things to replace the old ones.
- Liability coverage – Protects you from being sued for injuries in your home.
If someone gets hurt on your property, your insurance can pay for their medical bills and other costs. It can also cover the cost of a lawyer if you are sued.
FAQs About Renters Insurance
At first glance, it may seem uneasy and tedious to understand how renters insurance goes. But if you check further, it is not that complicated to interpret.
Besides, renters like you can take advantage of keeping your personal belongings safe. To help you learn more about renters insurance, here are common questions and answers that people frequently ask.
How is renters insurance different from homeowners insurance?
In detail, renters insurance and homeowners insurance protect your things, but the difference lies in what they protect. The building itself is also covered by homeowners insurance.
The main thing that renters insurance covers are your stuff. You also get liability coverage, but the policy doesn’t cover the apartment itself. The building’s owner will have insurance that will pay for any damage to the building.
Do renters need insurance?
Renter’s insurance is not required by law. But it’s not uncommon for landlords to make renters insurance a requirement for signing a lease. They can do this, so if you haven’t already, be ready to buy renters insurance when you fill out a rental application.
How do the actual cash value and replacement cost of renters insurance differ?
Actual cash value renters insurance pays out based on how much an item is worth now. So, if you bought a laptop for $1,000 five years ago and it got stolen, you would get a lot less than that now.
On the other hand, renters insurance will pay out the amount it would cost to replace the item. So, if you need to repurchase the same laptop, you’ll get $1,000. Because they pay out more than actual cash value policies, replacement cost policies usually have higher premiums.
Does the renter’s insurance cover damage caused by fire?
After you pay your deductible, renters insurance will cover damage caused by fire and smoke. In case of fire damage, the amount of money you get back depends on several things, such as:
- Whether you choose actual cash value (depreciated) coverage or replacement cost coverage for your items.
- The insurance you buy
- Your tax-free amount
In case of a fire, you will file a claim for the loss, pay your policy’s deductible, and then get paid for the rest of the costs of the loss, up to the limits of your policy.
Does theft get paid for by renters’ insurance?
After you pay your deductible, renters insurance will protect your things from theft. Most renter’s policies cover your belongings if they are broken into, stolen from your car, or taken from you while traveling. You can review your policy details to find out when you can make a theft claim on your renter’s insurance.
What isn’t covered by renters insurance?
Renter’s insurance typically doesn’t cover the following:
- Valuables. Jewelry and other expensive collectibles and valuables may not be covered by a basic renters policy and may need extra coverage.
- Small Business. If you run a small business out of your home, it doesn’t mean that your renter’s insurance will cover it. For example, suppose your work laptop gets stolen from your apartment. In that case, it might be considered business property and not be fully covered by your renter’s insurance.
- Vehicles with engines. Your renter’s insurance won’t cover you if you drive or own a car, even if it’s parked on your property. On the other hand, personal items kept inside the car are usually covered.
Why is it important to have renters insurance?
Renter’s insurance is essential because the landlord’s insurance policy won’t cover your things. The landlord’s insurance covers damage to the building, but your belongings are not.
Liability claims are another reason why renters insurance is a good idea. If a visitor to your rented home gets hurt, the liability part of your renter’s insurance will pay for it. If that person sues you, your renter’s liability insurance will also help pay for your legal defense.
Renters’ insurance can also pay for temporary housing if you move out of your rental. At the same time, it is being fixed because of fire, smoke, or water damage.
Where can I find insurance for renters?
Renters’ insurance is most often bought through an insurance agent. Through our network, you can avail of renters insurance. We have 30+ years of experience in insurance solutions, so even on your worst days, we’ll be at our best.
Here at Risk Managers, we offer insurance to protect the things you own. We have insurance plans for people — cars, homes, renters, and more. Book an appointment or contact us to know how we can help you with your renter’s insurance.