Renters Insurance: A Tenant’s Guide to Basic Policy Coverage

Author: Lauren Ross

Blank Insurance Claim Form And Pen

You worked hard for your five-piece bedroom set – along with the rest of your belongings – and would like to keep it in tiptop shape for as long as you can. What if one day you came home to find it damaged because of a water leak coming from the unit above? You would be devastated. Fortunately though, you made the conscious decision early on to get renters insurance so you can replace your belongings if and when something like this happens, right?

Unfortunately, many renters have a wide range of excuses on why they don’t need renters insurance:

  • I don’t need it since I don’t have enough stuff

You may feel exempt from getting a policy because you don’t have a lot of stuff in your apartment. However, you’ll be surprised at how much you actually own even in a one-bedroom.  The average renter has about $20,000 worth of belongings in their apartment home. This includes clothing, furniture, appliances you have purchased, home décor, and technology – imagine having to replace all of that out-of-pocket because you don’t have insurance.

  • My landlord’s insurance policy will cover my belongings

Another myth circulating the renters’ community is that many tenants believe their landlord’s policy will apply to them – wrong! The policy is to protect the structure and frame of the building, not the renter’s personal things.

  • Renters insurance is too expensive

Lastly, many renters assume that renters insurance is too expensive, when actually the premium is about the cost of four tall lattes at Starbucks per installment.  Renters insurance is affordable and it can protect you and your belongings. Instead of paying a monthly installment, you can opt to pay the premium in an annual lump sum.

What is Renters Insurance? Renters insurance is a form of property insurance that protects against theft and damages to your belongings inside your rental.

Basic Renter’s Coverage:

Personal Property Coverage: Personal property coverage is a basic entity of renters insurance that will protect your possessions against damages and theft in your home or away from home.  As stated previously, renters’ possessions are worth a lot, so it benefits to have a policy that protects them.

Another perk of the policy is that you’re protected anywhere you go. If someone steals your laptop out of the car or stole a watch from your suitcase while on vacation, your policy will help to replace it up to its limits.

Other Disasters Covered: fire, lightning, windstorm, hail, explosion, smoke, vandalism, burglary, theft, freezing, and plumbing leakage

*Flood damage is not covered in a basic policy*

Personal Liability: If you injure a guest accidentally or they’re injured inside your home, your personal liability coverage can help pay for the damages and legal fees if you’re sued. Personal liability coverage varies by provider, so check to see what your limits are. Most minimum personal liability coverage is $100,000.

Medical Payments: Your policy can help cover the medical bills (up to the policy limits) of a visitor or guest if they were injured at your apartment. This typically doesn’t cover you or household members.

Property Damage to Others: Your insurance policy travels with you. If you accidentally damage or break someone’s property, renters insurance can help with the payout up to the limits.

Additional Living Expenses: Say your apartment home has experienced a fire and you need a temporary place to live. If you have renters insurance, the policy will help pay the costs of living expenses up to its specified limits. Additional living expenses include hotel, laundry, food, etc.

Credit Card Fraud/ Identity Theft Protection: Having renters insurance can help protect your identity, too. If you fall victim to credit card fraud and forgery, the policy provider will work with your banks and credit bureaus to replace any money taken during the theft and restore your name.

Coverage Options to Consider:

Replacement Cost Coverage: When you add a replacement cost coverage (RCC) to your policy, your belongings will be replaced at current market value unlike actual cash value (ACV). You will get a larger payout with RCC than ACV, because ACV takes into consideration the wear and tear of the item.

Earthquake Coverage: Do you live near a fault line? If yes, then you should greatly consider adding earthquake protection to your basic coverage to protect your items against damage.

A Rider: Your policy will only replace damaged or stolen goods up to a certain amount – and some assets are excluded. You may want to add a rider onto your policy to protect your pricier and more valuable items. Some items to consider adding a rider: jewelry, crystal dishes, coin collections, fine art pieces, and high-fashion bags and clothing.

Keep in mind when you’re scoping out insurance providers that policy coverage maybe different between agencies.