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Imagine this scenario: You find the perfect apartment building, complete with amenities like plenty of closet space and a private balcony. The lease prohibits tenants from using grills on the balcony, but your upstairs neighbor ignores the rules and has friends over for a barbecue one weekend. Things go wrong, and the grill causes a fire, destroying most of the building and all your personal belongings.
At this point, you might think that the building’s owner is responsible for covering your losses since they have insurance on the property. You might also expect your neighbor to bear some responsibility since they caused the destructive fire. Unfortunately, that’s not always the case, and you may be on your own in the aftermath of the disaster.
However, if you have renters insurance, covering costs when something happens to your rented home or belongings is much easier.
A renters insurance policy covers your personal belongings against damage, loss, or theft, so when the unthinkable happens, you can replace them. It’s increasingly common for landlords to require tenants to carry this insurance, but even if you don’t have to have it, it’s worth investing a few dollars a month for extra peace of mind.
Many tenants mistakenly assume that when they rent a place to live, the building owner is responsible when something goes wrong that causes damage or loss of personal effects. However, while landlords carry insurance, it’s on the property itself, not the contents. In other words, in the case of a fire, the landlord’s insurance will pay out to repair or replace the building — not the items inside owned by the tenants.
It is your responsibility to protect your personal belongings. That’s where renters insurance comes in. If you have a policy, you can file a claim with your renters insurance provider after a fire, robbery, or another covered event that damages your belongings and receive cash to replace the lost items.
Some renters insurance policies will also cover your living expenses if you can’t stay in your place due to damage. You may also be able to purchase liability coverage, which will protect you from lawsuits arising from losses caused by your actions. For example, if you’re the one who hosted the barbecue that caused the fire, your landlord and neighbors could sue you for losses, but your renters insurance might protect you.
A renters insurance policy can also help protect your personal articles outside your home. If someone breaks into your car and steals your laptop, you can claim with the renters insurance to replace it.
Although the cost of renters insurance varies depending on your provider and insured items, a policy with no deductible — meaning you can replace belongings without paying anything — is often less than $250 per year. A policy with a $1,500 deductible is less than $170 annually. Considering the value of your possessions and the cost to replace them, the annual premium is well worth the investment.
Many people, especially younger individuals renting their first place, think they don’t own anything valuable enough to warrant investing in insurance. However, when you list your individual possessions, it will quickly become clear that it would cost thousands of dollars to repair and replace everything if it were to be lost or damaged.
A renters insurance policy will cover all your private assets, including:
The average personal property coverage is $30,000. Do you have an extra $30,000 available to replace your personal belongings? Your policy may also cover expenses when you can’t stay in your home, like hotel bills and meals, which can add up quickly while you find alternative housing.
If your renters insurance includes liability coverage, you’re also protected if someone sustains an injury in your home. For example, if your friend trips and breaks their arm while at a gathering in your yard, your liability coverage will pay their medical bills and legal expenses, if necessary. The default coverage amount for liability is typically $100,000, but you can purchase more if you want.
One of the most critical choices when buying renters insurance is an actual cash value (ACV) or replacement cost policy.
An actual cash value policy will pay you the current value of your possessions when you make the claim. More accurately, the insurer will pay the depreciated cash value, which determines the value of personal effect in today’s dollars, considering the depreciation due to age or use.
With a replacement cost policy, the insurer will pay to repair or replace private items with comparable items at current prices. In most cases, the company will pay you the actual cash value first, and then when you replace the item, you can submit the receipt so the insurer can pay the difference in the depreciated value.
Generally, a replacement cost value policy will cost more than an actual cost value policy. However, if you don’t have cash to replace your belongings or own expensive electronics that tend to depreciate quickly, that slight difference will make it possible to replace your items with comparable ones.
While a renters insurance policy will protect your personal effects against most losses, it won’t cover everything. The standard protections include losses due to covered perils, including:
Your policy may also cover water damage from sudden or unexpected emergencies, like an overflowing toilet. However, the policy likely won’t cover damage due to weather or flooding, your own negligence (such as leaving the window open and it rained in), or a burst pipe. If you live in a storm- or flood-prone area, consider purchasing flood insurance in addition to renters’ coverage.
Your policy may also exclude coverage for certain big-ticket items, like fine art, collector’s items, and expensive jewelry. For these items, you need to add an endorsement or rider to the policy that adds additional coverage. A rider becomes a part of your insurance policy and remains in effect for as long as you have it.
Some riders you might consider adding to your renters insurance policy include:
Renters insurance is an affordable way to protect your personal belongings and bank account in a disaster.
To determine how much coverage you need, take a detailed inventory of your belongings with their estimated price and current value. Gather receipts and note the purchase price, date, and item serial numbers if possible.
It’s not just the value of your belongings that determines your premium, though. Other factors that influence the price include:
Whether you’re just starting out and renting your first place or an experienced renter, a renters insurance policy is a must-have for financial peace of mind. Considering that most landlords now require tenants to carry this coverage, now is the right time to use Insurdinary’s simple online tool to find the perfect insurance coverage for your personal belongings.
With Insurdinary, all you have to do is fill out a short questionnaire about your needs and let us do the rest. We’ll find policies that meet your requirements, and you can compare them side-by-side to find the one that best fits your budget. Then, simply request a quote and apply online.
If you need additional help, contact us, and one of our experienced agents will answer all your questions about renters insurance and help you get the perfect policy to protect your personal belongings. Insurdinary makes it easy for everyone to get quality insurance policies at the best rates without hassles, so start your quote today.