What Does a Renter’s Insurance Cover and Does it Include the Coverage I Need?
More and more people nowadays prefer to rent an apartment than own a house. With the fast-paced lifestyle and the growing costs of owning real estate, the rise in rentals especially among millennials have become prevalent in large cities such as Miami, Boston and New York. This phenomenon is also due to the housing bubble back in the early 2000s followed by the great recession, where several homes were foreclosed and homeowners had been forced to rent instead.
As a renter, it’s more important to keep your personal belongings safe especially if you live in a house that you don’t own. In the event of fire, theft and vandalism, it’s high likely that the owner will not compensate for the damages and loss to your personal property. Someone might also suffer an accident in your rented apartment and decide to sue you. These situations are perfect examples of why owning a renter’s insurance is a necessity for every renter.
A renter’s insurance is one of the most overlooked yet important insurance policy for every homeowner especially, as the name suggests, those who rent. It protects your private property from various destructive events, protects you from liability and even pays additional living expenses if your rented home got destroyed and becomes unhabitable. Your landlord’s home insurance will only cover the damages incurred on the building itself but not on your own belongings. Some owners may even require you to have renter’s insurance prior to moving in.
A renter’s insurance has three coverage types designed to do the things mentioned above. These coverage types are referred to as personal property, liability and additional living expenses.
Personal property coverage is typically included in a renter’s insurance policy. Depending on whether you have a basic or a comprehensive policy, this coverage will pay the expenses of replacing your belongings that have been destroyed due to various circumstances. A comprehensive renter’s insurance policy will cover items such as clothes, furniture, appliances, electronics, jewelry and your computer. A basic policy will pay for expenses incurred from damages, theft and destruction of your property amounting up to your policy’s coverage limit from instances such as fire, riots, vandalism, theft, falling objects and more.
Your policy will also determine if the item you lost is eligible for claims depending whether you have a named perils policy or an all-risk policy. If you have a named perils policy, your insurance company will only pay your item’s replacement costs if it had been lost or damaged from the specific events listed in your policy. For all-risk policy holders, your insurance provider will pay the costs of your items regardless of the cause. Exceptions may apply even for all-risk policy, so check with your insurance company for any exclusions to your policy.
Personal property coverage doesn’t only cover the items while they’re in your apartment or house. Since it’s the items themselves that are insured, your renter’s insurance will pay for the laptop you lost in a hotel while traveling abroad, for example.
This coverage is designed to financially help you if you become legally responsible for damaging other people’s properties. This is also meant to cover medical expenses if someone had suffered an accident while within your rented property. For example, if an electrician has been doing repairs on your home and suffered any sort of accident, they may sue you for damages. A renter’s insurance will also pay for the costs of the legal processes involved.
Another example is if your dog had bitten a neighbor. The policy will pay for the medical expenses incurred up to the medical payment limit provided in your policy. This also applies if your dog had damaged your neighbor’s couch or if your child had vandalized the apartment halls. If you have renter’s insurance, shouldering these costs won’t cause a headache.
Additional Living Expenses
Supposing a fire had burned down your apartment building and you have to evacuate. Renter’s insurance will pay for your hotel, food and transport expenses should this happen.
Most renter’s insurance policies do not cover damages and loss due to floods. If you live in an area that is prone to such circumstance as coastal areas, getting flood insurance would be the best way to alleviate the costs of exchanging or repairing damaged belongings.
A renter’s insurance policy also wouldn’t normally cover damages to your property caused by your pet. If your pet, however, caused any damage to your neighbor, you will be paid for the expenses due to the liability coverage. Even with this same coverage, some insurance companies won’t allow or certain types of breeds such as Pit Bull, German Shepherd, Great Dane and more.
If you want to maximize your coverage and have a comprehensive protection policy, an umbrella policy is the best for you. It steps up your renter’s insurance policy coverage by adding extra liability coverage on top of your existing one, such as a pet canine liability.