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When you think of renters insurance, you most likely think of a policy that will pay to replace your belongings if a fire or other covered event destroys your rented home. However, personal property protection is just one part of a renters insurance policy that enhances your financial security.
Purchasing a renters insurance policy also provides you with liability coverage. Any number of things can go wrong in your home, and if they happen because of an accident or negligence, you could be on the hook to pay damages. Even if you never meant to harm anyone or cause damage, the resulting legal actions and reimbursements can devastate you financially if you are ultimately responsible.
Many landlords require tenants to carry personal liability insurance. Read on to learn about these policies and why buying one is a smart financial move, even if your landlord doesn’t require it.
Liability coverage with renters insurance covers property damage, legal, and medical expenses if an accident occurs in your apartment. Consider the following scenarios:
While you might not be directly responsible for any of these injuries or losses because they occur in your home or because of someone who lives there, you’re liable for them. When you have liability coverage, the injured party can make a claim with your insurer and receive compensation or reimbursement. In short, this part of your renters insurance policy covers other people and their belongings, not yours.
Most renter policies automatically include $100,000 in personal liability protection, but you can add additional coverage. The policy provides coverage for legal obligations related to:
Buying a renters insurance policy provides liability coverage for most accidents and incidents in your home, but it doesn’t cover everything. Some of the exclusions from this liability safeguard include:
As mentioned, most renters insurance policies include $100,000 in personal liability coverage. However, you can add more coverage, up to $500,000.
When determining whether to add additional coverage, you need to think about the effect a lawsuit could have on your finances. Plaintiffs and their attorneys will attempt to get you as much compensation as possible, which could mean financial devastation if you don’t have insurance. A good rule of thumb is to add up the value of all your assets, including your bank accounts, vehicle, and other belongings, and purchase enough insurance to cover that amount.
No one ever expects to become the target of a lawsuit. However, if there’s little doubt about your responsibility for someone else’s injuries or losses, you’ll likely face a trial or settlement. When this happens, the ultimate amount of the judgment against you could be significantly more than the actual costs of medical bills or repairs. For example, the plaintiff may include demands related to:
In short, you could face significant financial consequences without coverage for legal obligations arising from your personal liability.
Did you know that 75% of landlords require their tenants to acquire a renters insurance policy before signing a lease? From the property owner’s standpoint, this requirement reduces their risk of lawsuits, helps keep their own insurance premiums down by reducing claims, and provides extra protection against property damage.
However, the policy also protects you against losses due to covered perils, which include fire, theft, vandalism, smoke, wind storms, and some kinds of water damage. If something goes wrong, you can file a claim with the insurance company to receive reimbursement to help repair or replace your belongings.
You may not think you own enough items of value to warrant insurance, but consider what you own and how much it costs. A renters insurance policy will allow you to replace everything, including:
If you have precious items, like fine art or collectibles, you may need to purchase an additional rider to cover them, but even that is less than the cost of paying out of pocket to replace them.
The average renters insurance policy will pay up to $30,000 to replace your belongings, but you can purchase additional coverage if you have more expensive items. Unless you have the cash available to replace everything, buying a policy will give you extra financial responsibility assurance that you won’t be left with nothing if the unthinkable happens.
A renters insurance policy will also help you get back on your feet after a disaster. If you can’t stay in your rental property while it undergoes repairs, or if you need to look for a new place to live, your insurance will cover the cost of temporary housing. Usually, you can stay in a hotel or another rental priced similarly to your current place.
Keep in mind that if you live with a roommate and split the rent, you still need to purchase your own renters insurance to ensure legal liability coverage. Two unrelated roommates cannot share coverage under a single policy because they aren’t related, and it’s unlikely that the policy will cover both your belongings and liability entirely. Not to mention, if your roommate’s actions lead to a liability claim and you aren’t responsible, you don’t want it to affect your insurance coverage.
Some landlords require tenants to have renters insurance with liability coverage in order to have pets. Data from the Insurance Information Institute indicates that the average dog-related injury claim is $64,000, and even if your furry friend has never shown any signs of aggression, there’s always a chance something can happen.
If you have a dog, you should purchase a renters insurance policy that covers your pet and pet-related incidents. Not all companies will cover dogs or have significant pet restrictions, such as only covering the animal while on premises, not at the local dog park or while you’re out on a walk. Many companies also have restrictions on which breeds they’ll cover and prohibit certain breeds.
When a renters insurance policy doesn’t cover your dog or you want more coverage than the policy offers, you can purchase a separate pet liability policy for additional protection.
It is possible to purchase a liability-only insurance policy, but it’s not always easy. Some companies offer standalone liability coverage options to cover the damage you do to others or their property, but it’s more common to find standard rental insurance. Not to mention, the price difference between renters insurance and a liability-only policy isn’t typically enough to warrant giving up the extra protection for your belongings.
With average premiums of less than $250 per year, renters insurance policies are an affordable way to protect your financial well-being from the effects of an incident that damages your property or leads to a liability claim.
Insurdinary can help you find the perfect policy for your budget and coverage needs. Simply answer a few questions on our simple online form, compare options for belongings and liability coverage side-by-side, and request a quote from one of Insurdinary’s licensed agents. When you’re ready to buy, apply online and get coverage immediately.
You can also contact us directly with questions about renters insurance and more. Let us help you get the protection you need for extra peace of mind.