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Renters Insurance: Everything You Need to Know

So, you’re moving into a new rental property, but you aren’t sure if you should get renters insurance. Some landlords and management companies require their tenants to obtain it, while others don’t. Either way, it’s important to know what your options are when it comes to renters insurance. To help you out, here is everything that you should know about renters insurance.

Renters Insurance: What is it?

Renters insurance covers you and your valuables while you are renting an apartment or house. Renters insurance can be thought of as mini-homeowners insurance, with protection that lowers your liability in case of certain unexpected events like burglaries, guest injuries, and natural disasters. However, unlike homeowners insurance, renters insurance does not provide any structural coverage – your landlord is responsible for properly insuring the home itself.

Simply put, renters insurance covers your belongings in your apartment or rental house, and not your apartment or rental house itself. For example, if a pipe bursts in your apartment building, ruining your belongings or if another tenant’s guests take off with some of your valuables, you’ll have options for reimbursement.

There are always limits to coverage when it comes to any type of insurance. Your individual renters insurance policy will lay out the specifics, but expect there to be an overall limit that caps the total amounts you can be reimbursed.

What Does Renters Insurance Cover?

Renters insurance protects the belongings that you keep inside your apartment or rental home, as well as your personal liability if someone is injured in your home and you are found responsible for that injury. If you are unable to stay in your rental home for certain reasons, such as a fire for example, renters insurance will also usually cover your short term housing and moving expenses.

Generally, a good renters insurance policy will cover damages to your possessions due to:

  • Theft

  • Vandalism

  • Fire

  • Falling objects

  • Freezing

  • Water and steam damage (not including floods)

  • Smoke

  • Tornadoes

  • Windstorms and hail

This is not a complete list, so make sure to read over your personal policy carefully to know exactly what your coverage is.

What Doesn’t Renters Insurance Cover?

It is just as important to know what your renters insurance doesn’t cover as is it to know what it does cover. Again, similar to homeowners insurance, there are two key types of situations that were left off the above list: floods and earthquakes.

If you are renting in an area where you need to be worried about floods and/or earthquakes, then it is important to look into purchasing separate policies for coverage. You can obtain flood insurance through a number of private insurers, as well as the National Flood Insurance Program (NFIP). You can often add earthquake insurance as a supplement to your renters insurance through the same company you purchased your original renters policy.

How Much Does Renters Insurance Cost?

Renters insurance is generally quite affordable, with the average policy costing just over $15 per month. According to the National Association of Insurance Commissioners (NAIC) the average yearly costs of renters insurance ranges from $114 to $262.

The amount you pay for renters insurance can be affected by a few variables. These include the location in which you are renting (both the state and your neighborhood) and the size and type of the rental building. It is best to do your research when looking for renters insurance and to get multiple quotes so you can get the best deal possible.

Does Renters Insurance Cover Moving Costs?

While renters insurance does not cover your standard moving costs, if your policy start date goes into effect before moving day, it will cover your belongings in transit – to a degree. So while you won’t be able to file a claim for your TV if it breaks while moving, you may be able to do so if someone were to steal it from the truck.

Does Renters Insurance Cover Items in Storage?

There are some renters insurance policies that cover items in storage, called “off-premises coverage.” The reimbursement amounts are often lower than they are for your belongings that are within the actual place that you are living. There also may be a limit on the length of time items in storage are covered (for example, your items may only be covered within one month of your move).

What About Renters Insurance and Pets?

One of the main things that is missing from the list of things that renters insurance covers is damage related to pets. For example, if your cat were to scratch up the carpet in your rental home, you will be responsible to cover the costs of repairs.

A limitation to this is personal liability, with some renters insurance policies covering pet-related damages to guest property while they’re on your premises. Chances are that your policy does not cover pet-related injuries like dog bites, since these types of liabilities are not usually covered under renters or homeowners insurance.

Cash Value vs. Replacement Cost Value

Renters insurance can reimburse you for accepted expenses in two different ways: cash value payouts and replacement cost value payouts.

  • Cash Value Payouts: With cash value payouts, you will be reimbursed for the actual cost value of the item in question. It is important to keep in mind that depreciation is taken into consideration when determining value. For example, a five-year-old laptop that may have been expensive when you bought it, will not be valued the same as a new laptop that is just as nice.

  • Replacement Cost Value Payouts: With replacement cost value payouts, you will be reimbursed in the form of new items that are of “like kind and quality” to the item in question. For example, instead of getting cash for that previously mentioned five-year-old laptop, you will either get the repairs of your laptop covered or you will get a new laptop that is similar in features.

Be sure to check with your policy to learn about their individual method of payouts. You may have multiple options available or you may be limited to just one type.

How Do You Get Renters Insurance?

The first step in obtaining renters insurance is figuring out exactly what kind and how much coverage you need. Take an account of the possessions that you are keeping in your apartment or rental home. The more items you have and the higher their value, the more coverage you are going to want to have.

Once you have done that, do some research to find a company you like. There are many standard insurance providers that you can go through, or you could choose a specialty renters insurance start-up company like Lemonade of Young Alfred.

Be sure you get multiple quotes so you can get the best deal possible. Take into consideration the premiums when you are making your decision, but also look at coverage amounts and deductibles. Sometimes it is worth paying a slightly higher  premium if it means having a lower deductible and more comprehensive coverage.

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