Is Renters Insurance a Good Idea?

Renters insurance often falls under the radar, either because tenants think it unnecessary or simply because it just never occurs to them. While a minority of landlords requires it prior to moving in, renters insurance is usually something most landlords fail to mention. Unfortunately for renters, this means they do not realize that the landlord’s insurance policy does not cover their valuables. For this and other reasons, renters insurance is an excellent idea for anyone who rents a home. In what follows, we’ll discuss the basics of renters insurance and explain why it’s important.

Types of Coverage

Renters insurance can provide various types of protection in the form of different coverages. Like homeowners insurance, the main purpose of renters insurance is to protect the policyholder’s personal belongings against vandalism or theft. If you have never had renters insurance before, you can ask your current auto insurance company if they offer policies. Most larger companies do, and you will receive a substantial discount for having multiple policies. The following coverages are usually included in a standard policy:

1. Personal property coverage. The purpose of this coverage is to protect your possessions from theft, vandalism, water damage, etc. If your belongings are stolen or damaged, you can file a claim to get reimbursed for the loss. The amount of your reimbursement will depend on your deductibles and the type of property coverage you select. With actual cash value coverage, you will only be reimbursed for the current value of your possessions less depreciation. With replacement coverage, you will be reimbursed for what it would cost to buy the item new today.
2. Personal liability coverage. This coverage provides protection for you and any visitors to your rental unit. If a guest is injured on your property, renters insurance will pay for the medical expenses and any judgments against you if a lawsuit ensues. Your legal fees will also be covered. Most policies offer around $100,000 of personal liability coverage. You can increase this amount if you are willing to pay higher premiums.
3. Improvements coverage. The purpose of improvements coverage is to protect the policyholder from lawsuits in the event that his/her property is damaged. The coverage will then pay for any improvements or repairs that need to be made to restore the property.
4. Fire legal liability coverage. If you are found liable for a fire that occurs on your rental property, this coverage will pay for any judgments against you and cover the damages that resulted.

Additional Resources:

• Homeowner’s and Renter’s Insurance
• Renters’ Liability