A Guide to Renters Insurance

Renters insurance is a common type of protection available to people renting a property. This coverage protects their investment from fires, floods, and other unexpected events. Even if you’re only renting a home or apartment, you can still get the financial protection of insurance. 

While renters can’t get and don’t need homeowners insurance, there are still ways they can protect their personal property and finances from theft and accidents. 

If you are renting your current residence, this guide to renters insurance can help you determine what types of best coverage are available and what you’ll need to know to protect your personal property and finances. Let’s take a deeper look at renters insurance and how it can benefit you.

Why is Renters Insurance Necessary?

Even if you don’t own your residence, you may still need to protect your personal property and valuables from theft, fire, and other unexpected events. 

Liability protection is another important area to consider: renters can still be held liable for accidents and injuries that aren’t the result of structural problems. If you’re renting and don’t have the proper protection, you’re at greater risk if someone is injured on the property. 

Renters, particularly those in apartments, risk being affected by neighbors’ actions and mistakes. If a neighbor starts a fire that spreads to your apartment or building, you may have difficulty collecting compensation for damage to your personal property. 

It’s easy to undervalue the cost of many personal items. While a particular item might not sell for as much as when it was new, the replacement price will often be higher. 

When deciding if you need renters insurance, it’s vital to take an inventory of all of your personal property and decide how much it would cost to repurchase it all. The final total price may surprise you.

Renters Insurance What Does it Cover?

Renters’ insurance often covers three main categories: personal property, liability, and living expenses. When renting, you don’t have to worry about insurance protection for the building, but you’ll need coverage for other areas. 

While renters insurance covers many situations, including theft, vandalism, explosions, and fire, anything related to floods and earthquakes usually requires a separate policy or an additional add-on. Let’s look at the main types of protection renters insurance can provide and what you’ll need to know when buying the proper coverage.

Personal Property

These are just some personal items that might be damaged in an accident or stolen—for example, television, clothes, electronics, and jewelry. Renter’s insurance can protect you from fires or other damage and theft, but only if you keep good records of what you own. 

You hope you’ll never make a renters insurance claim, but when you do, the insurance company will want documentation for what was stolen or destroyed. Before you get an insurance quote, take an inventory of everything you own. 

This inventory should include pictures and receipts, if possible. Not only will this inventory help you decide how much coverage to purchase, but recording this information will make it easier for you and the insurance company to figure out what was stolen or damaged. 

Most policies have two main types of personal property protection: actual cash value and replacement cost. Actual cash value will be reimbursed to you for the cash value of any items damaged, stolen, or destroyed. 

Replacement cost policies will pay you to replace any items with new purchases. Policies that offer the replacement cost option are usually more expensive than actual cash value coverage.

Liability

Renter’s insurance liability coverage can help you deal with the costs associated with a range of damages you don’t cause. If you are sued for any kind of injury or other damages in your residence, renters insurance can cover the cost of legal expenses and court judgments. 

As a renter, not an owner, you won’t be liable if the structure fails and causes injury. This injury or damage can be caused by you, your family, and your pets. But accidents in the home are often not the result of the building itself, and this is where renters insurance can be essential protection for your finances and peace of mind. 

There are usually coverage limits for common types of renters insurance. Usually, these limits start around $100,000 but can be as high as $300,000, depending on the insurance company and level of protection. If you feel that the coverage offered by your renters’ insurance policy is insufficient, consider looking into other insurance options, including umbrella policies.

Living Expenses

If your home is seriously damaged, you may be required to find another living area during repairs. These costs can add up, and renters insurance can help you pay for these unexpected expenses. Living expenses coverage will help to pay for hotel bills, temporary rentals, restaurant meals, and other everyday surprise expenses. 

This type of protection is important as these costs can be high and may be hard to pay for unless you have enough resources. This type of coverage has limits that vary between companies. 

Depending on your area, temporary relocation costs can be high, and not all insurance policies will pay enough to cover your expenses. Research to ensure you’re getting enough coverage for your particular living situation.

When Does Renters Insurance Not Help?

While renters insurance can be excellent protection when you don’t own your own home, it does have limits. Insurance policies don’t usually cover “acts of God.” These can include earthquakes, floods, and sewage backups, among other events. 

Coverage for these risks can be available as add-ons or “riders” to a renters insurance policy or a separate policy. Suppose you own some particularly expensive items such as costly jewelry, musical instruments, or high-end electronics. 

You may need to supplement your renters’ insurance with additional riders to cover these items. Riders are an essential aspect of renters insurance which lets you protect against unusual events or cover particularly expensive items which wouldn’t typically be included with a basic policy. 

Renter’s insurance also won’t cover damage related to negligence or any deliberate property destruction.

How to Buy Renters Insurance

When you’ve finally decided to buy renters insurance, it’s vital to ensure you know what you need and get enough coverage. Different insurance companies have various requirements, but the following steps will apply in most cases.

Inventory and Access Insurance Needs

The first step in deciding how much renters insurance coverage you need is taking a detailed inventory of all personal property. Personal property coverage is only one part of what renters insurance protects, but it’s a common claim type that needs good supporting documentation. 

While most insurance companies won’t need your inventory list when taking out a policy, making a claim will be required. Be sure to get photographs with labels and serial and model numbers. Make a note of the replacement cost of any items recorded. 

Many people are surprised when they realize how expensive it would be to replace all of their personal property. The total is the price it would cost to purchase a replacement. This inventory will help you understand the value of what you currently own. 

This information is important when deciding how much coverage to buy, and it’s critical in the event you need to make a claim. You’ll want to keep this list away from your home in a safe deposit box or cloud storage. If this documentation is destroyed in a home accident, making a claim can be much more challenging.

Pick an Insurance Company.

When deciding on a company to buy renters insurance, check with the companies where you already buy policies. Insurance companies who provide auto insurance and other types of protection will also sell renters insurance. 

Many companies offer bundling discounts to save money when adding a renters insurance policy. Please ensure the company you choose offers enough coverage for your situation: basic coverage amounts are popular because they are what most people need, but they might not be the right fit for everyone. 

If you have special insurance needs, such as particularly valuable items which need more protection, make sure the company you eventually choose will allow you to purchase add-ons to protect your property fully.

Decide on a Policy and Add-ons.

Most companies that provide renters insurance have various policies and coverage types to fit most people’s needs. Decide which of their offerings will give you the best coverage. 

Replacement cost policies are more expensive than cash value coverage but will reimburse you the total amount needed to buy new items that have been stolen or destroyed. Decide on what deductible you are comfortable paying. 

Renter’s insurance policies that have higher deductibles also have lower premiums. Your choice will depend on how much you can afford to replace or repair items out-of-pocket. Renter’s insurance policies can be extended with add-ons that offer increased protection for special situations. 

While regular renters insurance policies don’t offer protection from acts of God like earthquakes or hurricanes, these can be available through add-ons. Depending on your own financial situation, you may decide to upgrade your renters’ insurance policy with one of these additions.

What Are Some Top Renters Insurance Companies?

Many companies provide renters insurance, so shopping around is essential to find the offer that makes the most financial sense for you. Here are some top companies that may be able to offer a plan that fits your needs and budget.

Lemonade Renters Insurance

While not available in every state, Lemonade is a digital-first company, and all quotes and claims are handled through their website or an app available on Android or iOS. With Lemonade, there is no insurance agent that you need to speak to about your policy. 

You can quote and buy renters insurance through their website or app without speaking to a representative. The app can handle claims by recording a video of you describing what happened. 

Claims can be handled quickly as well: Lemonade says it processes 30% of claims instantly and can wire money directly to your bank. Bundling discounts are available to customers with other types of coverage, such as pet or car insurance. To see how Lemonade can help protect your property and finances, check out their website: https://www.lemonade.com/.

Erie Insurance

While Erie Insurance has higher prices than other companies in the industry, this well-reviewed company is a solid choice for renters insurance. Erie Insurance stands out with a wide range of add-ons to protect your property from particular acts of God and a range of uncommon situations. 

Earthquake and flood add-ons and sewer and drain backup protection are available. While most renters insurance policies don’t cover these situations, Erie Insurance lets you add this protection to your policy if needed. 

Are you a member of a home-sharing community? Erie Insurance offers Home Sharing Coverage that can protect your personal property even when someone else is in your home. To find out more about the many ways Erie’s renters’ insurance can meet your coverage needs, see their website for a quote or purchase a policy at: 

American Family

American Family offers great rates for renters insurance and expanded coverage types for people with unique needs. While many renter’s insurance policies have limited coverage for jewelry, gemstones, and furs, American Family gives you the option of insuring these items for their total value. 

Their diminishing coverage instantly reduces your deductible by $100 and by an additional $100 for every year you don’t make a claim. This discount is for up to a total value of $500. This add-on is a great money-saving option for customers who don’t plan to make frequent claims on their policy. 

Renter’s insurance from American families can be a great value with prices less than the national average. To see how American families can protect their property and finances, check their website for a quote.

Summary

Renters insurance is an important protection for people who don’t own their own homes and can help you cope with various unexpected situations. 

Renter’s insurance doesn’t cover damage or loss from certain events, so it’s crucial to fully understand the protection limits of any coverage you seek to purchase. Knowing what insurance options are available is the first step to finding coverage that works for your situation at a price you can afford.

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