Renter’s insurance is a type of insurance that protects the policyholder against losses that occur in a rented home. This insurance is different than the policy most landlords are required by law to carry; the landlord’s insurance covers only the physical building, not renters’ possessions.
Many renters do not realize this difference and erroneously believe the landlord’s insurance will cover them in the event of a loss. Others think their belongings are not worth enough to bother insuring. Do not make either of these mistakes, as not buying renter’s insurance is a potentially expensive error.
Losses covered by renter’s insurance may include theft or damage as well as liability for injury to another person that occurs on the property. These are typically the same types of losses covered under a home owner’s policy, except the renter’s policy does not cover the physical building.
It is worth repeating that landlords’ insurance policies do not cover possessions brought into the residence by the renter. Unless you are renting a furnished home, you have at least a bed, table and a chair or two that you would need to replace in the event of a total loss. This is in addition to clothing, kitchen utensils, electronics and other incidentals. The cost to replace these items will add up fast.
Many options are available for renter’s insurance, and you can customize a policy to fit your needs. A named risk policy will cover only risks specifically spelled out in the policy. More common today is the all risk policy, which covers all types of risk except those specifically excluded by the policy (typically floods, war and nuclear accidents). People living in a flood plain are encouraged to purchase separate flood insurance.
Certain losses come with a payout limit, so you may want to purchase extra coverage for those. Things like expensive jewelry or electronics and mold damage usually are limited to a few thousand dollars of coverage. If you expect a loss would exceed that amount you can purchase additional coverage.
Renter’s insurance can cover more than just possessions inside your rental unit. It covers theft from places other than your home; if your laptop is stolen from the local coffee-shop, it is covered. Renter’s insurance can even help pick up the cost of temporary housing if your home becomes uninhabitable
Remember, too, that you are liable for injuries to your guests. Anyone who trips and falls in your home has the right to expect you to pay any resulting medical bills. It may be an accident, but you are still legally responsible. Renter’s insurance will help cover those bills so you don’t have to pay them out of your own pocket.
Renter’s insurance can buy great peace of mind, as long as you make sure you know exactly what is and is not covered under your policy. Your insurance agent can help you determine the right type and amount of coverage for you.