Renter’s insurance protects you from financial loss if your rental property (or your belongings inside) is damaged or stolen. If your home becomes temporarily uninhabitable, it may also cover additional costs.
Most renters are unaware that their landlord’s insurance policy does not cover their belongings or liability if they are injured on the property. You might think it’s not worth the hassle but there are a number of reasons why renter’s insurance is so important:
The main reason landlords require you to carry renter’s insurance is because it protects them. If your personal property is damaged and you can’t pay for the repairs, a landlord may have to foot the bill. The same goes for any damage a tenant does to the property itself.
That’s why most landlords protect themselves with an umbrella liability policy that covers everything from accidental plumbing leaks to major natural disasters and they want their tenants to protect themselves. Landlords would rather not be responsible for tenant belongings, or any damage caused by tenants, so they may require insurance coverage to sign a lease with them. Oklahoma is one of the only states that doesn’t require renter’s insurance.
Renter’s insurance covers you for losses due to calamity. For example, if someone breaks into your home and steals a bunch of stuff, or fire burns down your apartment building, renter’s insurance can cover the cost of repairing damage to your property and replacing stolen or lost items. This also includes coverage in cases where extreme weather (such as a windstorm) causes damage to your property.
A policy with replacement-cost coverage will pay you to repair/replace damaged or stolen items at current market value (it won’t refund you the original cost of each item).
A policy with actual cash value coverage will pay for the loss minus depreciation–so it may not cover a total loss for expensive items like electronics.
Rental insurance covers your belongings. Many renters assume their landlord’s insurance policy will cover their personal belongings if the rental unit suffers damage from a fire or other disaster. However, most landlords’ policies don’t protect tenants’ possessions. You might think the items in your apartment are covered, but they’re often not. Renters insurance can reimburse you for your losses up to the policy limits if your belongings are damaged or destroyed by a fire, lightning strike or other calamity listed in your policy.
If you own a pet, like a dog or cat, they are prone to accidents. Dogs may bite and cause injury to someone visiting your home, or cats might scratch and damage the property of someone visiting. Renter’s insurance can cover medical expenses for injuries sustained in your home by anyone who is not named on the policy. It can also cover you if you are away from home.
For example, if your dog bites someone while you are at the park, renter’s insurance may provide coverage for the resulting medical bills. Check with your insurer for more details about what’s covered and what isn’t!
It’s easy to assume your renter’s insurance policy needs to be for a certain dollar amount that you calculate based on the value of your belongings. The truth is, there may be good reasons why your policy may need to be larger than this amount.
To start, you won’t be able to make a claim against your renter’s insurance if you only have the basic coverage but need additional help. To estimate the value of your personal property, take inventory and consider: How much would it cost today to replace all the possessions in my apartment? * Are they worth $30,000 or more?
Another reason why it might make sense for your policy to be larger than you think is because many people underestimate what their things are worth by 10% or more. If you’re trying to save money on renters insurance by not insuring enough items, it can backfire if disaster strikes, and your stuff is valued at significantly more than what you had insured.
Lastly, don’t assume adding more coverage will automatically raise your cost significantly. In fact, increasing coverage from $25,000 of personal property protection up to $50,000 doesn’t necessarily increase the total cost.
Once you’ve submitted the necessary paperwork and filed your claim, how quickly can you expect to receive a payment for your loss? The good news is that most claims are processed within two weeks of filing. That’s not to say that every claim will be paid out in only two weeks–some may take longer. But fortunately, most of them don’t. And if two weeks seems too long for your needs, you may be able to negotiate a solution with your insurer that suits your needs better.
It’s important to note that renters’ insurance claims sometimes involve more than just filling out a form and waiting for a check in the mail. There are plenty of potential checkpoints along the road from filing your claim to receiving compensation–and it’s possible (although rare) that things may slow down or even come to a halt at one or more points along the way while your insurer investigates what they consider suspicious circumstances surrounding your claim (i.e., they suspect fraud).
If this happens, don’t panic! Even though it’s frustrating and inconvenient when things get held up for an extended period, the claim will eventually be processed.
The next question is, “How much does rental insurance cost?” The answer depends on how much coverage you need. Is your apartment just a studio, or do you have a two-bedroom house in the suburbs? If you’ve got a lot of stuff, renter’s insurance will be more expensive than if your inventory consists of only a mattress and hot plate.
As for cost per month, it averages between $15 and $30 per month. That’s right; in some cases, it might be less than the cost of filling up your car with gas every week or two.
Don’t go without renter’s insurance, because the cost and inconvenience of a claim are much more likely than you might think.
Many renters think they can pretend nothing bad will happen…until it does. And when it does, you’ll have to pay for the damage out of pocket or make an insurance claim on your landlord’s policy–with a deductible and possible premium increase as additional costs.
Renter’s insurance is much more affordable than you might think, so don’t wait until you’re in the middle of a crisis before getting covered. You can get a quote for renter’s insurance online in just a couple minutes, and most renters could find peace-of-mind coverage for as little as $15 per month.
The Bottom Line
Rental insurance is like homeowners’ insurance. Insurance coverage can differ, but they both protect against specific risks and losses. While you may think you don’t need to purchase renter’s insurance, remember that it’s available to protect you from a variety of risks. So, before you buy into the argument that “nothing is going to happen” and decide against it, consider these reasons why you should have it.
Thankfully, rental insurance is a relatively inexpensive and simple way to provide yourself with financial protection. The peace of mind that comes from knowing your personal property is covered in the event of a disaster or disaster-related theft cannot be understated, either. So, take some time to look into getting rental insurance – it could make all the difference in the world.