What All Renters Should Know About Renter's Insurance


Do You Need Renter’s Insurance?

When it comes to insuring your residence, most people don’t think twice about having home insurance. However, only 35% of renters bother getting renter’s insurance. This low percentage could be because most renters don’t know what renter’s insurance actually covers. Many people believe, for example, that their landlord will cover all damages, or that what they own isn’t worth the cost of coverage. These common misconceptions can lead to renters losing everything in the event of a disaster.

Like every other type of insurance, renter’s insurance is a gamble. Knowing more about it can help you decide if it’s worth having. Here’s some important information that can help you decide if renter’s insurance is worth your while.

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What It Covers

The myth that landlords cover all damages and loss to property is simply not true. A landlord’s insurance policy only covers the building, property and liability for the landlord, not your personal possessions.

So, what does renter’s insurance cover? Generally, a renter’s policy will cover property loss caused by:

  • Fire, smoke, lighting, hail, wind, and explosion
  • Aircraft and other vehicles
  • Falling objects
  • Ice, sleet, and snow
  • Accidental damage from hot water heating systems, plumbing, and air conditioning
  • Theft, vandalism, and riot

In some cases, policies will also cover extra living expenses if you are forced to live elsewhere when your place is damaged through a covered cause. Additionally, insurance companies will pay legal fees if someone is injured, their property is damaged while in your home, or if you accidentally cause damage to the building.

How Much It Really Costs

Renter’s insurance is actually one of the most affordable types of insurance because only your property is being insured, not the dwelling itself. The total cost of your renter’s insurance will depend on where you live, your deductible, and the type of coverage you choose. According to the National Association of Insurance Commissioners, the average renter only pays about $15-$30 a month for insurance. That means, in the event of a disaster, all your property and legal fees will be covered for as little as $185 a year. Considering the average renter owns $20,000 worth of personal property, the few extra dollars you spend a month could really be saving you a lot.

Cash Value Vs. Replacement Value

The two types of coverage available in a renter’s insurance policy are actual cash value coverage and replacement value coverage. Actual cash value covers what the item is worth during the time of damage, while replacement value covers the amount of money it takes to buy a new item. Replacement cost coverage is typically 15% more a month, but does not take the item’s depreciation value into account if it is a few years old. With this policy, if your three year old television is damaged during a fire, your insurance company will reimburse you the cost of buying a brand new television.

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Is It Worth The Risk?

This is a question you’ll have to answer on your own. People always assume that nothing could ever happen to them. If you’re lucky, nothing will. But there’s always that chance. Whether it’s an accidental kitchen fire, a guest taking a tumble, or a home robbery, unfortunate events happen all the time, and without renter’s insurance, you’ll be the one responsible for covering everything. Isn’t knowing you have guaranteed protection worth those few extra dollars a month?

Date of original publication:
Updated on: October 06, 2016

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