Have you seen the media video footage of the fires, floods and storm damage that have recently hit various parts of the US? You often see the on-scene reporters interviewing the people whose rental homes or apartments were damaged about what they will do next and whether they had insurance coverage. All this damage does beg the question of whether you need insurance when you are renting? In this post, I will cover the key points of this question.
I believe, that if you are ready to rent a new house, condo or apartment, it’s a wise move to talk to your insurance agent about taking out a renter’s policy. The cost varies depending on the coverage type and amount you select, but will usually fall in the $15 to $20 per month range. These affordable premiums will give you the protection and peace of mind that you need.
Unfortunately, most renters assume that their landlord has property insurance that will cover them in an emergency, injury or for any losses. The reality is that landlord’s policy will only protect the landlord’s interest in the property and not those of the tenant.
Basic Coverage Concepts
Renter’s insurance will protect you from liability, pay costs for your damaged belongings and provide you with some amount of cash for emergency housing costs if there is an occurrence that prevents you from staying in your home. The coverage limits will be what you decide to purchase working with a professional. This insurance usually provides coverage for four key areas:
Your Belongings. The policy will protect your belongings from loss, theft or damage.
Liability Protection. Renters insurance can protect you from a devastating liability lawsuit. Suppose anyone were to be injured at your residence. In that case, you could be responsible for covering the damages or medical costs. For example, you could have a friend or family member that falls down a staircase in your home or gets bitten by your dog and without rental insurance, you could be responsible for paying the damages.
Emergency Living Expenses. As we have recently learned, emergencies can happen at any time. Your home could be flooded after a severe storm, or your home could be damaged in a fire. You will likely need to find a place to live in either scenario while repairs are being completed. When you have renter’s insurance, the costs of renting a temporary apartment or staying in a hotel until you can move back into your home will usually be covered. Your insurance will also usually cover the costs of eating out, moving costs and storage costs for your belongings. You will need to check out the policy to understand exactly what is covered and for how much.
Lease Requirement. For certain properties having a renters insurance policy may not be a choice. Many landlords now require you to have proof of insurance before they will hand over the keys to the rental unit. This requirement usually protects both you and the landlord.
What is Not Covered
You need to know that renter’s insurance won’t cover losses from floods, earthquakes or landslides. You’ll need to purchase extra coverage if those are problems that affect your area. That is why working with a professional whose is experienced in your region is so important.
Renter’s insurance also typically won’t cover accidents that happen in common areas such as hallways and stairwells. That also falls under the landlord’s insurance. For example, if your visitor trips on an uneven sidewalk, that claim would have to be handled by the landlord’s insurance. Also, renter’s insurance won’t cover pet damage to your home or belongings. For example, if your dog chews on your coffee table or soils the carpet, that’s not covered by any insurance.
The Need for Replacement Cost Coverage
When you buy coverage, you’ll usually have the option to choose between actual cash value (ACV) and replacement cost coverage. Replacement cost coverage is more expensive but it’s better because it doesn’t take depreciation into account. For example, let’s say three years ago you bought a new widescreen smart TV with all the latest and greatest technology for $1,600. If the TV is damaged in a fire today, ACV coverage will only pay the depreciated value of the TV. Replacement cost coverage will pay to replace the damaged TV at today’s prices for a new, similar model. This coverage insures you can afford to replace the key items in your residence. I have had to use this coverage in the past and I was glad I had it.
Summary
At this time, if you are renting an apartment, condo or home, having renter’s insurance is a must have in my opinion. The coverage, which usually costs between $15 to $20 per month, is an affordable way to protect yourself against life’s uncertainties and can save you out-of-pocket cash if an unexpected event takes place. It is a small price to pay for peace of mind.
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