As a renter, there are several different things you can do to protect your belongings and other personal items from damages.
Perhaps, one of the most effective methods is to buy a renter’s insurance policy. But is the insurance policy worth your money? Let’s find out.
What Is Renters’ Insurance Policy?
Renters insurance is a type of property insurance policy that offers protection for policyholder’s personal items. This include liability, and in some cases living expenses in the event of a loss.
If you’re renting or subletting a condo, townhome, apartment, single family home, duplex, loft, or studio, you can buy a renter’s insurance.
The coverage protects tenants personal property in the event of loses within the rented space.
Furthermore, renter’s insurance coverage protects against losses that are the outcome of liability claims.
For instance, when someone sustains an injury around your home or if the injury is not as a result of structural defects within the property, the owner’s not the renter’s insurance will be responsible for the bill.
Renters Insurance Explained
More often than not, evidence of renter’s insurance is required by many homeowners. Personal items within a rented property are usually not protected under the owner’s or homeowner’s property insurance.
For instance, if a fire or flood damages all the personal belongings within a rented space, the building will be protected under the homeowner’s policy. However, personal property will only be protected via renter’s insurance policy.
But if the renter doesn’t have this policy, he or she would be responsible for the cost of the damages out-of-pocket.
Typically, renters insurance provides three key types of financial coverage:
- Additional living expenses (ALE) protection
- Coverage for personal belongings
- Liability protection
Renter’s Insurance: ALE Coverage
The Additional Living Expenses (ALE) policy offers financial coverage against an insured catastrophe that compels the renter to temporarily move out to seek shelter somewhere else.
The protection will cover the payment of hotel bills, nonpermanent rentals, and restaurant meals. It will also cover other living costs while the rented space is undergoing repair or renovation.
Many policies will compensate you the entire difference between your extra living costs and your regular living costs.
Nonetheless, there’s a limit on the entire amount an insurer will pay or qualification time limit for additional living expenses payments.
Renter’s Insurance: Coverage for Personal Possessions
This renter’s insurance protects your personal belongings from loss in the event of fire, theft and other types of loss situations.
As a renter, you should consider buying enough renter’s insurance that can restore all your personal belongings in case of any form of loss.
One of the easiest ways to figure out this amount is to come up with a detailed list of all the items you have. Furthermore, you should add their estimated replacement costs.
Once you decide to buy renter’s insurance you have the freedom to choose between replacement cost and actual cash value protection.
On the one hand, Actual cash value policies are made up of a deduction for depreciation. On the other hand, replacement costs coverage is more expensive.
However, if your personal items are damaged or destroyed, it will offer a reimbursement that is large enough to purchase a new replacement of the items at the complete retail price.
Renters insurance protects a policyholder against loses in the events of windstorm, vandalism, fire or smoke, explosion, and some types of water damage.
Many renter’s insurance policies do not offer protection against earthquakes and floods.
If you need flood coverage, you can get it from the National Flood Insurance Program. You can also get the coverage from some other private insurance companies.
What if you need earthquake insurance? You can buy that distinctly or have it included as approval to your renter’s coverage based on where you live.
If you have any excessively high-value belonging, you should consider adding floater insurance. This is a separate policy that offers extra protection for more expensive valuables in the event of loss or theft.
Renter’s Insurance: Liability Protection
This renter’s insurance policy offers liability protection against litigations for bodily injuries or damages to belongings caused by the renter.
This includes damages caused by their pets or even their family members or loved ones.
This policy protects legal defense expenses up to your policy’s limit. This renter’s policy further include no-fault medical protection as a part of the liability coverage.
This policy allows an individual who sustains injury on your rented property to forward their medical bills directly to the insurance service provider instead of a lawsuit.
Read more about the benefits of insurance.