Your landlord’s insurance policy on your rental covers damage to the building, items the landlord uses to maintain the property, and some liability coverage. Your personal property and liability don’t fall under the landlord’s coverage, so you’re the one paying if you lose your property in a house fire or get sued for damage you cause.
The National Fire Protection Association found the average loss from a house fire was $19,500, which could drive you into significant debt. Thankfully, you have another option that gets you off the financial hook for your losses: renter’s insurance. Here are the biggest benefits offered by this insurance option and common rental scenarios it covers.
Personal Property Loss
Do you know the total value of your personal possessions?
Bankrate found people routinely underestimate this figure — the average value ranges from $20,000 to $30,000. Renter’s insurance prevents you from paying out-of-pocket if your things get damaged or stolen by covering your losses. You might not be able to replace sentimental mementos, but at least you don’t have to outfit your entire apartment again. If you own particularly pricey goods, such as an antique grand piano or expensive art pieces, most insurance companies let you increase the overall coverage limit or add a specific rider for these assets.
Insurance companies offer either the fair market value or the replacement value when they calculate how much money you receive to replace your personal property. The fair market value looks at the average price for your used items and typically gives you fewer funds to work with. The replacement value gives you the cost of brand new products.
You maximize the protection offered by renter’s insurance by creating a comprehensive home inventory.
Some insurance companies offer applications to streamline this process for you, although robust note taking tools such as Evernote provide a valuable alternative.
You need a picture of the item, the receipt if available, the average price for a replacement and any other relevant information. Once you assemble this inventory, keep multiple copies in different locations.
An inventory doesn’t help you if the only copy exists in the house that burned down. Online-based storage options let you safely store this information in an easily accessible location.
Protection Outside the House
Some renter’s insurance policies extend personal property protection outside your rental. For example, if you leave your laptop in the car and someone steals it, your coverage kicks in and pays for a replacement. You may also get protection for lawn equipment, outdoor furniture, and other items in your yard.
Temporary Living Costs
You can’t live in your rental property during building repairs, but hotel expenses add up quickly.
Renter’s insurance covers temporary living costs through loss of use coverage, so you aren’t forced to couch surf after a disaster. Many hotels and other short-term rentals don’t provide you with a full kitchen, so your food costs may soar due to frequent take-out.
Your increased living expenses also fall under this part of renter’s insurance.
Sometimes you end up in unfortunate circumstances where you’re responsible for damage to the rental building or injuries to a guest.
For example, if you light a lot of candles around the house and they start a fire, you’re legally liable for the property damage. A guest ending up in the hospital after tripping and falling down your stairs also falls in this category. Your landlord’s policy only covers tenant injuries and damages caused by the landlord’s actions, so guests are on their own without a renter’s insurance policy.
Lawsuits cost a lot of time and money. If you can’t afford to pay for damages, a public record judgment will show up on your credit report and background checks.
Renter’s insurance lets you avoid these problems through liability protection.
The policy handles these costs so you don’t drain your savings or face future credit problems, and the person harmed by your actions can cover their medical bills or repair the property damage.
Renter’s insurance policies provide many benefits and are also relatively inexpensive.
The Institute of Insurance Information reports the average annual cost for a policy is $188. If you use your existing insurance company for renter’s insurance, you get a multi-plan discount. The discount cuts your premium costs and makes this option even more affordable.
Two factors play a major role in your overall costs for this insurance: your coverage limits and your deductible. Insurance companies offer standard limits for personal property and liability. If you want additional coverage, you pay a higher premium. Your premium also depends on your deductible. A lower deductible results in additional premium expenses.
Renter’s insurance provides a broad range of protection for an inexpensive price.
You don’t want to think about your apartment getting robbed or a friend injuring themselves at your rental, but you need to proactively protect yourself from these situations. The only thing worse than suffering through these events is facing a lawsuit and a drained bank account.