Renters Insurance Guide

While looking for an apartment, you may have come across renters insurance. Maybe you noted apartment listings where the landlord required proof of insurance. After weeks of searching for a new home online, you may have also started to see ads urging you to purchase a policy. What exactly is renters insurance and do you really need it?

What Are the Benefits of Renters Insurance?

When you rent property, you outsource most liability problems to the landlord. For instance, if the water heater breaks or the roof leaks, the landlord becomes responsible for fixing this. However, what if the storm that caused the roof to leak also damaged some of your personal belongings? You may have to pay for that.

Liability Coverage

Your landlord may become liable for issues related to the property itself, but you may become liable for your or other people’s use of the property. If someone becomes injured on the property, he or she may sue you and recover damages. Renters insurance may pay for the compensation awarded.

Personal Property Protection

Renters insurance policies reimburse you for losses related to several unfavorable events. According to NerdWallet, these may include natural disasters, theft, vandalism, construction accidents, explosions and riots.

Loss of Use

If your home becomes inhabitable for any reason, renters insurance may pay for you to stay somewhere else while awaiting repairs. It may cover the expense of restaurant meals, hotel bills or even another apartment.

Who Should Get Renters Insurance?

No laws currently require renters to have insurance, but, ideally, anyone who rents property purchases renters insurance. These plans tend to be so inexpensive that almost anyone can afford it. On average you can expect to pay about $15 per month. There are some people who do need this insurance more than others do.

Pet Owners

Dog bite claims are on the rise and getting more expensive. If you own a dog, even if your pup is small and sweet, consider renters insurance. Other pets can also pose a risk to others, such as snakes and cats.

Residents of Volatile Areas

Even if you live in the nicest area, there’s no telling when civil unrest or a bad character could steal or deface your property. If you live in a volatile area, then the risk increases dramatically. Renters insurance provides some peace of mind.

Wealth Builders

When creating and building wealth, one of the first things your finance guru may enquire about is your liability coverage. If you rent property, even if it’s just your summer vacation home, you need insurance to protect you from the financial cost of lawsuits.

When Should You Use Renters Insurance?

In the best-case scenario, you never make a claim on your insurance policy. Still, there are two main times to use it.

You Suffer Damages

If you suffer injuries or your personal property becomes damaged, you may use your renters policy. In these instances, the insurance company becomes focused on reimbursing and protecting you.

Someone Else Suffers Damages

Your policy may also protect your financial interests if you are responsible for certain types of damages against someone else. Dog bites are one good example. Another is when you break the neighbor’s window while playing golf in the backyard.

An Example Of Using Renters Insurance

A week after moving into his new home, Seth decides to install security cameras so he can keep an eye on Mister Whiskers. When the contractor comes to install the security setup, Mister Whiskers playfully pounces on the man and nips him on the ankles. The contractor is terrified of cats and is so startled by Mister Whiskers’ guerilla warfare tactics that he falls and sprains his ankle. He sues Seth, who then becomes liable for a $1,500 medical bill. The renters insurance company pays the bill.

A year later, while spying on Mister Whiskers through the security cameras, Seth notices water on the living floor. He calls the landlord who acknowledges a burst pipe flooded the room. Seth returns home to find his shoes, rug and brand-new PS5 ruined. The landlord pays for the contractors to fix the leak and property damage. Seth’s policy reimburses him for the lost items and pays for one night’s stay in a pet-friendly hotel with Mister Whiskers.

Steps for Getting Renters Insurance

Getting renters insurance is much easier than virtually any other policy you may ever need to purchase. Some people accept policies from their current car insurance provider. However, a more involved process can get you better rates:

  1. Find out what isn’t covered in your future or current landlord’s insurance policy.
  2. Determine how much money you can set aside per month for renter’s insurance.
  3. Make an inventory of your personal belongings and estimate the value.
  4. Shop around to see what the best rates and terms are.
  5. Choose a policy that provides a good balance of perks and price.

Quick Questions

Will my renters insurance cover items stored away from my property?

If you have a rented storage unit or plan to go snowbirding in your RV, your renters insurance may cover damages and losses at that time. However, some policies may place restrictions on how much to cover for off-site belongings. Some coverage only reimburses about 10% for these items.

What if I damage my own property?

Ironically, while renters insurance often covers the cost of accidental damage to someone else’s property, it may not cover damage to your own. For instance, if you accidentally break your own windows, you may need to pay for that out of pocket.

Can a landlord legally refuse to rent me a property because of no renters insurance?

Yes, though renters insurance is not required by law, landlords generally have the right to make it mandatory to rent the specific properties they own.