Posted August 4th, 2020 by Jason Metz
If you’re moving into a new apartment or home, you may not think you need renters insurance. After all, having a landlord means it is their responsibility to fix the building if it floods, right?
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Well -- not exactly. If you rent an apartment, bedroom, home, or even a dorm room, your own personal belongings, whether damaged or stolen, are not covered by your landlord’s or property management company’s insurance policies. Any kind of renters insurance policy is better than no policy at all, and having protection can help you rebuild following a minor to a catastrophic loss. Insurance policies can start around $5 per month and go up to about $30 a month. Skip ahead if you want to learn more about the typical monthly or annual cost of renters insurance.
If you rent your living space, EverQuote recommends renters insurance for protecting your clothing, furniture, jewelry, art, electronics, bedding, appliances, home goods, and other personal belongings in the event of an accident or event. You can choose your own coverage levels (and therefore right-size the monthly/annual cost you pay) depending on your individual needs.
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Renters insurance generally covers your personal property, your legal liability in case someone is hurt or you accidentally damage someone else’s property, and additional living expenses if you can’t live at home because of a problem covered by the policy.
A landlord’s insurance coverage pays for damage to the building structure, but it will not pay for damage to your belongings. For example, if there’s a fire, the landlord’s insurance will pay to repair the building, but it would not cover your clothes or furniture, or any extra expenses you have if you have to temporarily move out.
What is renters insurance?
Renters insurance, also known as an HO-4 policy in the insurance industry, protects your personal belongings against damage or theft, and it also protects you in case another person is injured while on your property. The difference between having the right insurance policy and not having the right insurance policy, or having coverage and not having coverage, can be profound and deeply affect people’s lives if something bad happens.
Personal Property and Liability
Personal property is a part of renters insurance coverage that pays to repair or replace your personal belongings if they are damaged, destroyed, or stolen.
Liability is another part of renters insurance coverage against a claim or a lawsuit resulting from bodily injury or property damage to others caused by an accident while on your rental property.
Perils vs Hazards
Perils, a term which you’ll most often see listed in a renters insurance policy, are potential events or risks that can cause a financial loss, or a potential adverse event. In other words, peril means danger. In insurance contracts, perils that are typically covered include fire, wind, water (excluding floods), and theft.
A hazard is a factor or activity that may cause or exacerbate a loss. For example, smoking inside your apartment could be considered a hazard, or leaving ice on the sidewalk after a winter storm. A hazard makes a peril more likely to happen.
While both words may seem similar, they do mean very different things in the insurance industry, and the difference between these two words could cause many disputes between you and your insurance company. For example, your insurance company may deny your claim for roof damage after a big storm because you neglected to replace an old roof or take care of a hanging tree limbs.
Types of Renters Insurance
There are three types of renters insurance that could be best for you:
Basic Renters Insurance:As the name suggests, basic renters insurance is the most basic, or least comprehensive, of the three types of renters insurance. Typically, these kinds of policies are quite limited in scope. For example, if something happens to your home that is not on the list of perils, unfortunately you wouldn’t be covered for damages. Damage to your personal items from perils including fire, lightning, hail, wind, explosion, vandalism, aircraft or vehicle collision, sinkhole collapse, volcanic activity, riot, or civil commotion are covered under this basic policy.Read more about what’s included in basic renters insurance below.
Broad Form: Broad form renters insurance is the most commonly purchased renter’s policy and it covers your personal belongings against the perils in a basic renters insurance policy with some additional coverages. Like basic renters insurance, if a peril isn’t listed, your items aren’t covered by that danger. All basic renters insurance perils are included in broad form renters insurance, and additional coverages include burglary/break-in damage, falling objects (like a tree limb), weight of ice and snow, freezing of plumbing, accidental water damage, or artificially generated electricity.
Comprehensive/Special Form: If you live in an area prone to violent weather like hurricanes, you will want to consider purchasing a comprehensive policy that protects against that particular weather event. The premiums for comprehensive form renters insurance may be higher than broad form and basic renters insurance, but this type of insurance is the most inclusive of the three options. While basic and broad form renters insurance list specific perils that are covered, special form renters insurance covers all possible perils (except for exclusions specifically stated in the policy.) Everything that could happen to your personal property is covered under a special form policy, except for damages from: ordinance of law, earthquake, flood, power failure, neglect, war, nuclear hazard, and intentional acts.
What does renters insurance cover?
Renters insurance can help protect your furniture, clothing, and other personal belongings. In the case where you may not be able to live in your rental property, renters insurance can also provide you with reimbursement for other living expenses like a hotel stay, and it can also help you pay for damages incurred to your property’s additions or alterations that you make. One of the most important aspects of renters insurance protection are personal liability and medical payments to others. With coverage, you can get help paying for bodily injury or damage caused by an accident that occurs on/in your rental property and help pay for medical or funeral expenses.
Liability covers property damage or injuries to others caused by you or someone in your household. For example, if your child hits a ball through a neighbor’s window, liability coverage will pay for the damage.
Renters insurance also typically includes no-fault medical payments coverage. If someone suffers a minor injury and blames you, this coverage pays out quickly, whether you were negligent or not.
Renters insurance does not cover injuries to you or your household members. If you slip on your rug and sprain your ankle, your medical expenses are generally covered by yourhealth insurance,not renters insurance.
Dog bites are typically covered under the liability portion of the renters insurance policy, whether you’re at your home or taking your dog for a walk. But if you do have to submit a dog bite claim, expect a rate increase at the time of your renewal, or even a policy nonrenewal.
Loss of Use & Additional Living Expenses
Renters insurance typically covers loss of use, also called “additional living expenses.” If your rental property is uninhabitable due to damage from a peril like fire, renters insurance can pay for additional living expenses such as hotel costs, restaurant meals and other bills. Your renters insurance policy might also help cover expenses if you need to permanently relocate.
However, renters insurance usually does not cover additional living expenses due to the cancellation of a lease. If you’re evicted or break the terms of a lease, renters insurance won’t cover hotel or relocation costs.
Renters insurance typically covers your belongings while you’re moving, but only for perils covered by your policy. For example, if your television was stolen, you can file a renters insurance claim. However, if you accidentally dropped and broke the TV while moving, it most likely will not be covered.
Renters insurance might have lower coverage limits if your items are in storage. This is called “off-premises coverage.” For example, a policy might only cover up to 10% or $1,000 (whichever is greater) of personal belongings for up to 30 days from the time you begin to move your property to your new home.
If you move, make sure you give your renters insurance company the new address. The cost of the policy might increase or decrease depending on the new location
Typical renters insurance policies will reimburse you for belongings stolen from your apartment. This includes thefts of your electronic devices, clothing, music or sports equipment, furniture, jewelry, your wallet and the cash inside, and new locks.
Good news is your renters insurance also covers theft outside your home. So, if your wallet happens to be stolen at a restaurant, you’ll be covered.
When you bind a renters insurance policy, your coverage amount should be based on the cost to replace all of your possessions.
Renters insurance usually covers some types of accidental damage, such as damage you accidentally do to someone else’s property. Depending on the accident, coverage might come from a combination of the landlord’s insurance and your renters insurance. For example, if you accidentally start a fire while cooking dinner, the landlord’s insurance would cover the building and your renters insurance would cover your belongings and damage to your neighbor’s belongings.
What is not covered by renters insurance?
While basic renters insurance covers most of your personal property and liability, many insurance agencies offer additional and optional renters insurance coverages for things like engagement rings or other expensive jewelry, high-value antiques or fine art, or backed up sewers or drains in your rental property. Theft extension can help extend your personal belongings to cars, trailers, or boats, as an optional coverage add-on.
While renters insurance covers your personal belongings in case of fires or tornadoes, earthquakes and floods are not covered under basic renters insurance policies, and you will need a separate policy if you want insurance from those events. There are 5 major things to take into consideration that aren’t covered by your renters insurance policy:
Renters insurance typically does not cover structural damage to the home. A landlord’s insurance generally covers structural damage. For example, if the weight of ice damages the roof, that would be covered by the landlord’s insurance.
Renters insurance does not cover pet damage for belongings, or to structural damage. If your dog chews up your couch and your cat scratches the walls, no matter how cute they are, insurance won’t pay for damage.
But… renters insurance may cover pet damages to someone else’s property under the liability portion of the policy. For example, if your dog chews up your best friend’s expensive handbag, it may be covered
Renters insurance typically covers dog bites under the liability portion of the policy, whether you’re at home or taking the dog for a walk. But expect a rate increase at renewal time -- or even a policy nonrenewal-- after a dog bite claim.
Renters can purchase flood insurance from a private insurer or through the federal National Flood Insurance Program (NFIP). Flood insurance from the NFIP covers your personal property up to $100,000.
Depending on which state you live in, you may be able to add earthquake insurance as an endorsement to a renters insurance policy or as a standalone policy. For example, if you live in California and want earthquake insurance, the California Earthquake Authority requires you to purchase earthquake insurance through the same insurance company as your renters insurance.
How much does renters insurance cost?
Renters insurance costs an average of $15 a month nationwide, according to the National Association of Insurance Commissioners’ (NAIC) 2019 home insurance report. The premiums for renters insurance average between $15 to $37.50 per month, and the policy is dependent on the location and size of the rental unit and the policyholder’s possessions, like TVs, mattresses, furniture, electronics, etc.
What impacts the price of renters insurance?
Your Zip Code: The crime rate in your location will significantly influence your renters insurance quotes. Insurance companies use your zip code to determine your risk in case of theft.
You Residence Type: Are you renting a single-family home or duplex? A condo or a bedroom? Depending on the type of residence you are renting, your insurance quote can go up. It’s more common for homes to be burglarized than apartments. If you’re renting an apartment, bigger buildings are better for a cost standpoint versus a smaller, older apartment building with a limited number of units.
Your Insurance Score: This score is calculated from information on your credit report and identifies a correlation between your credit history and your insurance risk. If you have a high score, your renters insurance costs will be lower.
Your Pets: Certain dog breeds may increase your renters insurance rate or disqualify you from getting a policy altogether. Some insurance carriers don’t provide coverage for animal liability so make sure you discuss this with your agent.
Coverage: When you opt for a certain range of coverage, make sure your belongings are properly protected. Your personal property can add up. If your assets are worth more money, your policy price will increase. If you opt to insure only $20,000 of your personal belongings, your insurance policy could cost $15. But if you are insuring $50,000 worth of items, it would be more.
Roommates: You may be able to share your renters policy with your roommate. Everyone on the insurance policy must also be listed on the lease, so if you have a friend subletting or crashing on your couch, they won’t be covered under your renters insurance policy. While this may save you money by being able to split the bill, your roommate’s insurance claims go on your record, too.
Bundling Coverage: Your auto insurance provider may allow you to bundle your car insurance and renters insurance, but that could mean your renters insurance quality could go down. Check your protection before moving forward with bundling to ensure you don’t have lesser coverage, which could cost you more out of pocket when it comes to filing a claim.
Learn more about how much renters insurance costs, including how to calculate how much you’ll need in coverage to replace your possessions here.
Related: 6 Things You May Not Know Are Increasing Your Insurance Costs
Is renters insurance worth it?
Not everyone needs renters insurance. If you are a dependent, such as a college student, you may be partially covered under your parent’s or guardian’s insurance policies. However, if you are a renter, the personal property, liability, and loss of use coverages that a renters policy provides are extremely valuable in helping to reduce your financial impact in case a sudden or unexpected event occurs.
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