Do You Need Renters Insurance, or Will Your Landlord Cover You?

What Is Renters Insurance?

Renters insuranceis similar to homeowner’s insurance in that it provides coverage in the event of a fire or another catastrophe.

Most renter insurance policies also provide personal liability coverage so that you are protected should someone be injured on your property.

Renters Insurance Coverage Options & Cost

There are two basic types of renters insurance policies that can be purchased: actual cash value and replacement cost.

An actual cash value policy is a basic policy that will pay you the value of the property at the time of loss.

In other words, you will not receive the full amount that you paid for your possessions or the amount needed to replace them, but a smaller amount that takes depreciation into account.

Replacement policies pay the actual cost of replacing your possessions.

For example, if you need to replace a ten year old stove that was damaged in a fire, you will be given the amount of money you need to purchase a brand new stove.

Replacement policies tend to cost a little more than cash value policies but are often worth the extra when you have a lot of possession to replace.

Besides policy type, the two leading factors that will affect the cost of renter’s insurance are the amount of coverage you buy and the deductible on your policy.

Obviously, the more coverage you buy, the more you can expect to pay. Fortunately, renter insurance premiums are usually relatively low since you are insuring possessions, not the building you live in.

Although you won’t be insuring your building, its location can affect the cost of renter insurance. If you live in an area that has a lot of crime, you will likely pay more than someone who lives in a safer neighborhood.

The type of dwelling you live in can also have an impact on cost. Buildings that stand alone or are constructed with fireproof materials can net a discount for renter’s insurance.

Discounts may also be available if you have a security system, smoke alarms, or other security features.

Do You Need Renters Insurance?

Although renter insurance is not required by law, it is a smart buy for most people.  Many people assume their landlord’s property insurance will cover them, but here’s the reality:

• Your landlord’s property insurance will not cover your personal possessions if the house burns down or if the roof leaks on your television.
• It will also not protect you from a lawsuit filed against you because someone slipped on the icy walkway you were responsible for clearing.
• And it will not cover your living expenses if you are forced to temporarily live somewhere else because of a fire or some other peril.

The most you may get is the sympathy of your landlord.

A renters insurance policy, on the other hand, will provide significant financial protection for all of the things mentioned above and then some.

This has been a guest post from Bailey Harris, who writes about homeowners insurance and other finance topics for www.homeownersinsurance.org.

Tagged as: apartment rental insurance, landlord insurance, rental insurance, renter ins, renter insurance, renters insurance, tenants insurance