Understanding Rental Insurance

If you’ve made the decision to rent your home, apartment or condo, it’s probably time to begin at least considering a renter’s insurance policy. Not only is renter’s insurance typically inexpensive, it will cover your valuable belongings in the event of fire damage, water damage, many natural disasters and burglary, and many policies will even provide living expenses during a time of emergency. You will also receive protection from liability in accidents that occur within your rented space, effectively protecting you from unwanted and unexpected financial hardships. The cost of your policy will fluctuate mildly based on location and the crime statistics of your area – however, the near-priceless value of many of your possessions doesn’t change, and having a renter’s insurance policy guarantees the things that matter most to you stay under your control. Many renters decide that having this control is far more ideal than the other option, which is to leave your life in the control of circumstance.

Before understanding just what a renter’s insurance policy is, it’s important to know what it isn’t. Many are mistaken in believing their belongings are safe in their rental so long as the landlord carries insurance. However, in order to have your possessions covered, you need to have your own rental insurance. Your landlord’s insurance covers only the structures and materials owned by the holder of the policy – namely, the landlord. Also, living with a roommate who owns a renter’s policy only guarantees assurance that the items owned by that policy’s holder will be replaced. Fortunately, renter’s insurance policies are very affordable. Depending on your needs, you can often find a policy for $200 a year or less.

In looking for a policy, there are a few components of rental insurance you must be mindful of. Based on your region, there may be additional insurances you may have to purchase separately in order to be completely covered. This mainly applies to coastal regions, where hurricanes and earthquake damage often occur with a frequency that justifies purchasing protection against them. Water damage will typically be covered with your normal policy, but this usually refers to burst pipes and water heaters, whereas water damage caused by nature (i.e. floods) may have to be covered separately. Damages done by pets will usually only be covered if they have been specifically written into the policy.

Another thing to look at is whether the policy you are considering offers “Actual Cash Value” or “Replacement Cost Coverage” for your possessions. As the name implies, ACV will only pay for what your property was worth at the time of the claim, whereas RCC covers the total cost of replacing the item in question.

In order to ensure you are receiving proper coverage, it is important to inventory your personal belongings before purchasing a policy. Only inventoried items will be covered, so it is especially important to make sure you account for things both most expensive and dear to you. It may even be helpful to include photographs or shoot a video of what the rental’s spaces look like. Ultimately, disclosing as much as you can to your insurance agent ensures coverage that fits you best. And when it comes to preserving the things you most need and cherish, that coverage could certainly come in handy someday.