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What Is Renters Insurance
And Why Do I Need It?  

That first question is easy to answer: renters insurance provides coverage in situations where you live in a home you don’t own. That can include renting a single-family house or renting an apartment, condo, townhome, and so on.

But there’s one very good reason to take just a moment and consider your options when it comes to getting a life insurance policy, and that reason is the safety and security of your loved ones if you should pass away unexpectedly.

To help you as you consider that important topic, here are the key things you need to know about life insurance so that you can make sure your family is protected for the long run.
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What Specifically Is Covered By Renters Insurance?

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.

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What Kind of Renters Insurance Should I Buy?

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

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

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.

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3 Reasons Why You Need Renters Insurance

It’s Cheap

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.

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It’s Necessary

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?

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You Don’t Want to Pay for Lawsuits

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.

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Here’s What Is Not Covered By Renters Insurance

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.

Cars and Other Vehicles

Many people mistakenly believe that because renters insurance covers personal belongings, and because cars technically qualify as personal belongings, then cars should be covered under a rental policy. That’s not the case.

Vehicles are not considered household items, which is why they need to be covered through a car-insurance policy.

Natural Disasters

Just like with homeowners insurance, a rental policy will not cover loss or damage caused by most natural disasters. That includes flooding, tornados, earthquakes, and hurricanes. In order to cover your belongings from those types of disasters, you will need to purchase a separate policy—or purchase an “add on” to your existing policy.

So, if you are in a region where natural disasters are prevalent—and especially if your community is susceptible to flooding—consider purchasing additional coverage to keep your possessions secured.

Bugs and Pests

Most renters-insurance policies do not provide protection against damage or loss caused by creatures and critters. That can include rats, termites, bed bugs, and more.

The best way to handle such pests is to keep an ongoing relationship with an established exterminator to make sure your home is critter-free. (Or ask your landlord to provide such a contract as part of your rental agreement.)

Items Belonging to Other People

If you are sharing your rental home with a roommate or other tenants outside of your family, it’s important to note that their items will not be covered by your rental insurance. Neither will they receive liability coverage in the event of a lawsuit.

Your rental policy covers you and your immediate family. That’s it.

High-Value Items

The majority of rental policies have a cap for repairing or replacing specific types of items. For example, your policy might set a cap of $2,000 for claims made about jewelry. In that situation, if you have a collection or a single item of jewelry that is worth more than $2,000, you could be in trouble if it were stolen or destroyed.

In such cases, you can typically purchase a “rider” to include additional protection for your high-value items. Talk with your insurance agent, and don’t assume everything is covered just because you have a renters-insurance policy. Make sure you know where the boundaries are.
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