Renters insurance is designed primarily to cover your family’s possessions while renting a home. That includes covering furniture, electronics, jewelry, clothing, and so on. This coverage applies to negative situations including damage from fire and smoke, vandalism, lightning, wind, damage from water, and theft.
Your rental-insurance policy should also include personal liability coverage, which means you will be protected in the case of a lawsuit if someone is injured while in your home. Or if someone is injured by one of your pets.
Finally, most renters policies will include financial support to pay for temporary housing if you are forced to leave your home.
There are two basic types of renters insurance, and the difference between them is all about how the financial benefits are determined when you need to make a claim. Here are the two options:
Actual Cash Value: your insurance carrier will reimburse you for the actual value of your home or household items, minus any depreciation that may have occurred. For example, if your five-year-old couch is included on your policy and gets destroyed, you won’t receive a check for the cost of a brand-new couch. You’ll be reimbursed based on what a five-year-old couch is worth.
Replacement Cost: with this level of coverage, your carrier will pay to repair or replace household items based on their original cost. So, if that five-year-old couch gets destroyed, you’ll receive a check for what you originally paid for that couch ten years ago.
While many types of insurance can be expensive with high monthly premiums and high deductibles, that is not the case with renters insurance. In fact, renters insurance is very affordable.
For most policies, you will pay somewhere around $10 or $20 a month to receive tens of thousands of dollars’ worth of coverage for your personal items, not to mention liability coverage in case someone is injured in your home. That’s a great deal.
If you are renting your home, there is nobody else who is going to protect or provide security for your valuables and other possessions. Certainly your landlord’s property insurance won’t do it—such policies only cover what the landlord owns, which is usually just the physical buildings and other structures.
And while we don’t like to think about it, bad things do happen. Theft does occur. Fire breaks out more often than it should. And other types of property damage can strike without warning and damage or destroy important household items.
So why wouldn’t you cover yourself?
As mentioned above, most renters-insurance policies include liability coverage, which means you’ll be protected if someone injures themselves on your property and decides to sue you for damages.
It’s no fun to be sued under any circumstances. But it’s way less fun to be sued when you have no security or support. So get covered.
Learn the items not included in your policy so you won’t be left at a loss.
Renters insurance is a great investment for any person or family renting their home, whether it’s a condo, townhome, apartment, or single-family dwelling.
But like any insurance policy, there are some limits, and there are some items that won’t be included in a standard rental policy. Here are some of the most common examples.