Updated: March 2016
Even if you don't own a home, unexpected events may arise. While you may not always be able to prevent certain situations, such as a break-in or visitor's injury, you may be able to help minimize the impact. Whether you're renting a single-family home or an apartment, renters insurance may help protect you in important ways. Here's a look at some key coverages that a typical renters insurance policy may include.
Think of everything you own. The value of your belongings can quickly add up. Personal property coverage, a typical component of renters insurance, may help cover the cost of replacing your stuff if it's unexpectedly damaged or ruined. That protection generally applies to certain risks (also referred to as "perils"), such as fire and theft, the Insurance Information Institute (III) explains. So, if your computer and television are stolen, or your furniture and clothing are destroyed by a fire, this coverage may help you pay for the cost of replacing them. It's important to know that coverage limits — the maximum amount your policy will pay for personal property losses — will apply. Read your policy carefully or contact your agent for information on what may or may not be covered.
When purchasing a renters insurance policy, you may face a few different choices. For instance:
- You'll want to set coverage limits that are appropriate for your situation. Creating a home inventory may help you assess the value of your belongings and help you decide how much personal property coverage is right for you.
- You may also have to decide what kind of personal property coverage to purchase, the III says. A policy that provides actual cash value protection typically covers belongings up to their current market value (taking depreciation into account). Meanwhile, a policy that includes replacement cost coverage may help you pay to replace your items at today's retail prices after a covered loss.
It's important to consider that personal property coverage may not help protect everything you own. You may find that certain types of belongings, such as jewelry or a coin collection, have limited coverage under a standard policy. A local agent can help you decide whether additional coverage designed to help protect specific items (often referred to as scheduled personal property coverage) makes sense for you.
Liability coverage is another protection typically offered in a renters insurance policy. This coverage may help protect you from paying out of pocket for certain costs if you are found legally responsible for injuries to other people or damage to their property.
You probably don't expect an accident to occur, but if, for instance, your child throws a ball through a neighbor's window or you're held responsible for medical bills after a guest trips and falls over something in your home, liability coverage may help cover the costs.
As with other coverages, limits apply to the amount a policy will pay out after a covered loss. Read your policy to brush up on how much coverage it provides and make sure it fits your needs. Your insurance agent can help you adjust the limits if you decide you may benefit from additional coverage.
If you're renting a house or apartment, you typically have a place to call home until your lease expires. But what if your rented home were to be damaged by fire, for instance, and you were unable to live in it? That's where renters insurance may help.
Renters insurance usually includes coverage for additional living expenses, says the III. This coverage may help pay for additional costs you incur, such as hotel bills, or for the increased costs you incur on food that are above the amount you would typically spend, because you are unable to live in the home you're renting. Check your policy to learn how much coverage you have in place for additional living expenses and to review the risks your policy may cover.
Before renters insurance kicks in to help pay for a covered loss, you'll likely need to pay a deductible, the III says. The amount of your deductible is often tied to your premium (the amount you pay your insurance company to keep your policy in force). You'll typically find that the lower your premium, the more your deductible may be for each covered loss. Your deductible and premium are listed in your policy and may be adjusted based on your budget and needs. Your agent can help you make changes to your policy.
While renters insurance may help protect you in important ways, it's important to know that it typically does not cover the physical building you're living in. Landlord insurance is designed to help protect the owner's dwelling, while you, the renter, are usually responsible for protecting the belongings you keep inside. Similarly, while landlord insurance may offer liability protection for the policyholder, that protection typically does not extend to tenants.
Having certain insurance coverages in place may not only help protect you and your stuff. Renters insurance may also give you the peace of mind that comes with knowing you have a safety net in place — just in case.