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Importance of Renters Insurance

Do I need renters insurance? If you are a renter and you care about your personal belongings, you may need renters insurance. I say you may need it because it is not mandatory that tenants must buy renters insurance. However, some landlords usually require that their tenants must ensure that they have renters insurance in place.

What is Renters Insurance?

Renters insurance is a type of property insurance that provides coverage for renters against loss of their personal belongings and the liability within the property arising from other party different from the occupants of such property. Among all other types of insurance, renters insurance is considered cheap thereby making it affordable for a number of people. Therefore, if you are a renter of property such as home, apartment, condo or studio in which you have valuable belongings, it makes sense to go for renters insurance. The mistake a lot of tenants usually make is the wrong assumption they have about home insurance. They believe that once the house or apartment where they live is already insured by the landlord, that the insurance cover them. The fact that the property is insured does not negate the need for your renters insurance. The landlord insurance only covers the building. It does not cover your belonging. For instance, if the property including your belongings is gutted by fire, the insurance company will only rebuild the building while you will personally be responsible for the replacements of your lost items. So, if you think that you don’t need to buy renters insurance, you better have a rethink. You may think you don’t have much items in your apartment, hence no justification for renters insurance. Hmmm! I just want you to imagine how life will be if you should lose those things that are precious to you at home. Individually, they may look insignificant but by the time you add them up, you will realise that the value of your belongings is much. Remember that if there is fire outbreak, you might lose all the items the same time. That means you need to replace all of them. No matter how little they are to you, these are the items that have taken you years to accumulate. If it has taken you this long to have them, why do you think that you can easily replace them if any disaster should strike. It doesn’t matter how careful you are, actions from other people such as your children, neighbours or visitors can cause you a damage that may cause you a financial loss at the end. However, renters insurance is not compulsory.  It is a matter of personal decision.

Importance of Renters Insurance

You will understand the importance of renters insurance by knowing what the policy actually covers. So, what does renters insurance cover? These are explained below:

• Personal belongings: Renters Insurance provides coverage for your personal belongings such as clothes, jewelry, luggage, computers, books, DVDs, furniture, utensils and electronics etc up to the limit of the coverage. Please you need to understand that your insurance company will only replace your lost or damaged belongings up to the limit of the coverage. That means, if the worth of your belonging is more that the limit the coverage provides, you will be responsible for the balance needed to restore you to your original position. Therefore, you need to find out coverage limit from your insurer in order for you to determine whether it will be enough for you. For people that have very expensive items such as jewelry, musical equipment and collection of antiques, they may require extra coverage. Another good thing about renters insurance is that, it also provides coverage for your belonging while on trip. If you travel and your items got lost and damaged, your renters insurance will help you replace the lost items based on the terms of the policy. But the important point to note here is that, even though you have renters insurance in place, you will not be paid for any damage caused through your own negligence or intentional acts. Therefore, you still have to observe your duty of care in the handling of your belongings.
• Liability Coverage: At times, people tend to overlook this very important aspect of responsibility we owe other people when they are in your home or apartment. Ordinarily, if someone accidentally misses his steps on your staircase and falls down making him to sustain injury, you may say that you it is not your fault. The law may not see it that way. As long as the event happened in your residence, he may sue you for damages. If you have your renters insurance in place, you will not need to worry yourself about the liability you might incur through the process. It is now the responsibility of your insurer to defend you. The insurance company will need to pay for legal cost and any liability if you are found liable for the damages. There is an exception to this, If the person is an occupant of your house, your insurance company will not be responsible for such damages.
• Medical Expenses: Let’s still refer back to the example given above where a person fell while climbing your stair case. Or maybe, it is better to use another example as some people may claim that their apartment is just a bungalow without any staircase. If you don’t have a staircase in your apartment; that does not mean you don’t need renters insurance. It is possible that somebody may slide on a slippery floor of your home and sustain injury. In this case, the person may decide not to sue you. However, you may be responsible for the payment of his medical bills. Renters insurance provides coverage for this. Therefore, your insurer will pay or reimburse you the amount of the medical bill incurred to the limit of the coverage.
• Additional Living Expenses: Damage may happen to your home or apartment that may require that you move out temporarily before the apartment can be fixed. Your renters insurance will cover such hotel accommodation or any living expenses you might incur above the normal expenses you should have incurred if you don’t move out from your apartment. However, remember that your renter insurance does not cover the repair of the building. Your insurer is only paying you for the additional living expenses you incur while staying elsewhere in order to get your apartment fixed.

Read Also: Home Insurance Made Easy for Homeowners

Types of Renters Insurance Policy

Basically, insurance companies sell two types of renter insurance namely; Actual Cash Value and Replacement Cost Policies. Understanding the difference between the two will help you decide which option you will choose. If you choose actual cash value, it means that your insurer will only pay you the value of your item up to the limit of the coverage. The value of your item is arrived at by deducting the accumulated depreciation from the cost of the item. If the cost of a television when you bought it was $250 and its depreciation when it got damaged was $150, this means that you will receive $100 for the damage. Whether $100 will be enough to get another one is another question. That is why you need to select the type of renter insurance that you think is adequate for you.

On the other hand, in the case of replacement cost,  your renter insurance will provide coverage up to the amount that it will cost you to replace the item with the same or similar type/brand of the item. Nevertheless, for some items such as jewelry, antiques and other expensive items, there may be a limit to the amount of coverage you can enjoy. You need to find out from your insurer in order to ensure that you have enough coverage. In a situation whereby the coverage is not enough for you, you can apply for riders or extra coverage.

Perils Covered by Renters Insurance

You need to understand that your renters insurance only cover a set of listed perils. These perils are clearly stated in the HO-4 of home insurance. The perils covered under H0-4 (Rental Coverage) are outlined below:

1. Fire or lighting
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damaged caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft
10. Volcanic eruption
11. Falling object
12. Weight of ice, snow or sleet
13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system

Perils not Covered by Renter Insurance

There are perils that your renter insurance does not cover. These include floods, earthquakes, backup of sewage into your residence or anything you can describe as act of God. Notwithstanding, you can ask your insurer to provide you coverage for these perils. This may be important for people living close to areas that are prone to these types of natural disasters.

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