Renter insurance is a minimal cost for the peace of mind it provides.
Every renter should have it.
Whether you have a lot of possessions or not, it is about so much more than just your belongings.
Insurance exists to help you prevent financial ruin in the event that an accident or loss happens.
Many people are renting homes and apartments without renters insurance. I’m not sure why exactly tenants go without renters insurance. But if I had to guess I would say it had to do with two things – the thought that it really isn’t needed, or that it costs too much.
Perhaps people even believe that the landlord’s property insurance will cover your loss if the home experiences a fire or natural disaster.
I am here to tell you that none of the last three things are true.
What many people don’t know is that in addition to covering your belongings, there is a liability portion to a rental policy as well.
Meaning that if something happens and it is determined that you were at fault or the cause, the rental policy can cover the financial impacts of that to the extent of your coverage limits. I’ll explain more about what that means. So stay tuned.
While in college, I worked for one of the nation's top 3 insurance companies. Holding licenses to sell property and casualty insurance in more than 20 states. While I did not write homeowners' insurance, holding a property and casualty license, I could.
As a landlord, I recently experienced my first loss.
And the knowledge and experience I have gained from both of these are worth sharing. Especially if it can save you from unknowingly making a poor decision.
What Is The Purpose of a Renters Insurance?
A renters insurance policy will protect your possessions and sometimes other damage caused by a disaster that leaves you homeless or worse. But most importantly it will protect your financial interest as well.
What Do I Mean By Protecting Your Financial Interest?
As a means to spread more awareness about renters insurance, I am sharing the importance of renters insurance, what it covers, and how you can go about getting renters insurance today!
When you become a tenant your landlord should advise you to get a renters insurance policy. Some places like larger apartment complexes, require it and will charge you a fee, or put coverage in place for you (for a fee) if you do not have a policy in place.
Renters Insurance Information & The Importance of Renters Insurance
Renters insurance is a type of property and casualty insurance. And it is much like your car insurance.
What is property and casualty insurance?
Property is coverage that helps to protect you and the property you own, like your home or your car.
Casualty insurance simply means that the policy includes liability coverage. This coverage is to help protect you if you're found to be responsible for an accident that causes injuries to another person or damage to another person's property and/or belongings.
Property and casualty insurance are typically grouped together into one insurance policy. It is also known as P&C Insurance.
Rental insurance is only one type of P&C insurance, and it can protect you and pay for certain damages when an emergency situation arises like a fire, flood or even a break-in.
As with all insurance, there are different levels of renters' insurance plans. You’ll want to review all of your renter’s insurance options and select a plan that suits your family’s needs best.
If you’re renting your current home, but don’t have renters insurance, then please continue reading the information I’m about to share. I want to make sure that all tenants all over the world understand why they should have renters insurance and how to go about getting an insurance policy for their rental unit.
Who Should Have Renters Insurance?
Anyone who rents a property from someone else should have renters insurance. It doesn’t matter if you’re renting a condo, an apartment, or a house the point is that renters insurance is there to protect and care for a person who’s renting a location as their primary residence.
The owner of the home will have a policy in place that protects their property and financial interest, and it is the responsibility of you as the tenant to protect your property and financial interest and liability.
Since renters insurance isn’t always required by their landlords, many tenants go without it. Renters insurance is relatively inexpensive and is best for anyone looking to live in a rental. Just as you should not drive a car without having automobile coverage, you should also not live anywhere without having some sort of coverage as well. Here are a few scenarios where renters insurance can help.
How Much Does Renters Insurance Cost?
Renters insurance has different premiums based on where you live and other conditions. But getting coverage is as simple as going online, or calling an agent to get a quote for renters insurance.
Based on my research the average annual cost of renters insurance is between $300 and $400. That breaks down to less than the cost of a good dinner monthly.
There are some renters insurance plans that cost more or less depending on the place where you live, the area it is located, and the coverages selected.
There’s usually an annual or monthly payment option with different insurance carriers. The monthly rate may cost a little more than paying for a year of renters insurance upfront. As with many things, paying in full yields a discount.
What Will Renters Insurance Cover?
Renters insurance provides financial reimbursement for lost or damaged possessions due to things like fire, vandalism or theft.
While each renters insurance policy can cover various items, the basic rule of thumb is to know that renters insurance will help you recoup financially from a fire or similar unexpected event that’s not your fault.
There are three parts to a rental insurance policy. Let’s talk about them.
Coverages of a Rental Policy
Personal property coverage
Personal property coverage covers the cost to repair or replace your belongings. Things like clothes, furniture, and electronics, up to policy limits.
Liability coverage
This coverage provides coverage for repairs if you accidentally damage someone else’s property. It can also cover a guest’s medical bills if you’re found responsible for their injuries, up to the limits of your policy.
Additional Living Expenses
This covers additional costs related to a loss. Things like hotel bills, if the residence you rent is damaged to the point that you can not live there.
So in addition to covering damaged or lost possessions, renters insurance can help cover the tenant's liability for things like if a visitor is hurt on the property. In addition, it can help provide temporary financial help to have shelter after a disaster like a fire strikes the rental property, etc.
If you’re a tenant who wants to make sure you’re protected while renting, it’s important that you look into renters insurance. This is a worthwhile investment for anyone renting a residential property for the long term and wants to ensure they can recoup financially from a major disaster or accident to the property.
How You Could Be Liable?
In an accident, there is always a party that is at fault. Having been at fault does not mean it is intentional, but someone has to accept responsibility.
Because auto is a little more relatable, let’s start there with this example.
If person A and person B get into an auto accident and it is determined to be person A’s fault. Even if person B’s insurance company pays to get their clients car repaired or replaced, they will look to Person A’s insurance company to reimburse them for what they paid out as it was their client’s fault and ultimately their loss to cover.
This is why at minimum, all drivers are required to at least have liability coverage. This covers the damage or harm caused to others. Even if a person doesn't deem their own property as worth covering for repair or replacement.
The same is true when there is a loss at home.
If the place you live catches fire as a result of you leaving an electric heater on and unattended, then you can be seen at fault for the fire. While the homeowner’s policy will pay out to repair or replace the home. It is likely, they will go after you (or your insurance company) to pay back the damages that were covered.
What Happens If There Is A Loss, And You Do Not Have Renters Insurance?
When a person does not have insurance, they are still financially responsible for the part they play in an accident. Without insurance, it can lead to a lawsuit. A lawsuit can result in your wages being garnished, credit ruined, and/or other measures being taken to recover their money.
This is where financial ruin from an accident can happen.
On the flip side, if the house catches fire as a result of faulty wiring. And as a result, you lose all of your things. Your renters' policy will cover your belongings and such. But they may go after the homeowner (or the homeowners' insurance company). This is because it is their responsibility to upkeep the property and its components.
How To Shop For Renters Insurance Online
You do not want to wait until something happens, to find out the importance of having a rental policy. There should be a policy in place before you move into a new place.
To shop online, head to google. A quick search for shop rental insurance and many options to obtain a quote will come up for you.
You can also contact a local agent to shop different companies for the best coverage and rates.
If you have any additional questions that this article does not answer for you please drop them in the comments below and I will be sure to respond and update the article as needed.
Please click one (or all) of the share buttons below and share this with others who may not know what they do not know.
it's really simple and the message is already crafted for you to make it that much easier!
2 comments
TK, I’m so sorry for you and your tenants loss. Thanks for educating us on this matter.
Thanks Ron! I appreciate it.