Ask an Agent: Is Renters Insurance Really Necessary?
While renting an apartment or other home may not seem like as big a risk as owning one straight out, it’s still just as important to have the right coverage. But if you’ve never rented a property or been required to carry renters insurance before, you might be unsure of whether renters insurance is necessary. That’s why it’s important to get the answers straight from the pros, AKA independent insurance agents. Ask agents anything. They have the answers.
So when your new landlord tells you having renters insurance is mandatory, why is that? Is having renters insurance really necessary? Read on for the inside scoop to help you answer these important questions, and much more. Here’s a deep dive into renters insurance, including if you really need it and why.
Is Renters Insurance Really That Important, and Why?
Great question. Three main things here. First, your stuff. The cost to replace all your personal belongings adds up quickly, especially the longer you’ve been renting, and the more stuff you’ve accumulated. Second, renters insurance pays for loss of use coverage in the event you’re temporarily displaced from your apartment. Third, it provides liability coverage in the event you hurt someone else or damage their property. So yes, it really is that important to have.
Why Do Some Landlords Encourage or Even Require Renters Insurance?
In your apartment or other rented property’s lease is something called an indemnification agreement. Basically, the landlord wants a legal guarantee that they’ll get paid back in the event that you, the renter, get sued. Today, every commercial lease has this agreement in it. It would be extremely difficult nowadays to find a legitimate rental property that didn’t require renters insurance in order to protect not only you as the renter, but also them as the rental company.
What Are the Most Common Renters Insurance Claims?
In order to better understand why renters insurance is necessary, it’s helpful to be familiar with why tenants end up using their policies. Check out this list of some of the most common renters insurance claims:
- Theft: By far the most common claims filed by renters are for theft of personal property. Renters insurance helps pay for stolen personal property stored in your unit.
- Vandalism: Next up are vandalism claims, which can cooccur with theft incidents or happen by themselves. Renters insurance protects renters from having to pay for damage relating to someone else’s mischief.
- Water damage: Tenants also commonly file claims for water damage stemming from busted plumbing in the unit. Renters insurance covers the replacement of your personal property if it gets damaged by a covered water peril.
- Fire and smoke: Another common peril affecting renters is fire and smoke damage. Renters insurance covers you and your property for these catastrophes, too.
- Liability: Finally, renters commonly submit claims relating to liability issues involving bodily injury or property damage. Your renters insurance covers you if you cause injury or property damage to a third party.
Your independent insurance agent can provide you with even more real-life examples of why having renters insurance is so important.
What Does a Renters Insurance Policy Cover?
Though renters insurance is similar to homeowners insurance, it doesn’t provide coverage for the actual building’s structure, since that part of the property belongs to the landlord. However, renters insurance provides lots of important protection for renters in other ways.
The main coverages included in standard renters insurance policies include:
- Personal property coverage: Covers your personal belongings like furniture, clothing, electronics, knickknacks, silverware, etc. that are stored in the unit for perils such as fire or theft.
- Liability coverage: Covers legal expenses such as attorney, court, and settlement fees if you get sued for bodily injury or property damage to a third party. Coverage extends to all members of the family living in the unit, including pets.
- Additional living expenses: If your rental unit becomes temporarily uninhabitable following a crisis like a fire or natural disaster, this coverage will reimburse you for additional expenses while staying at a temporary residence like a hotel. Coverage also pays for things like additional gas mileage, laundry services, eating out, etc.
To protect yourself from losing your property or being without a place to live, and also from a legal standpoint, having renters insurance is critical.
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What Doesn’t Renters Insurance Cover?
While renters insurance provides a lot of beneficial coverage, it doesn’t protect you against just anything. Some perils not covered under standard renters insurance policies include:
- Wear and tear damage (i.e., failure of the renter to maintain the unit)
- Some natural disasters (i.e., floods, earthquakes, and mudslides)
- Damage from war or nuclear fallout
- Maintenance-related losses
- Business-related liability
- Insect damage or infestations
Renters insurance won’t cover any liability-related mishaps if you run a business out of your home. Also, to protect your personal property against flood or earthquake damage, you’ll need a flood insurance or earth movement policy. Your independent insurance agent can help you find these important coverages if you’d like to add them to your renters policy.
How Does Liability Coverage Help If Someone Gets Hurt?
If a guest or other third party gets injured on your rented property, the liability coverage provided by your renters insurance will help. Liability coverage pays for legal expenses if they choose to sue you, and also covers medical payments if they require professional care. Costs for liability-related mishaps can get extremely pricey without the right insurance, which is why having coverage should be a priority for all types of renters.
How Does the Property Coverage Protect Me If I Start a Kitchen Fire?
Fire damage is one of the most common renters insurance claims. If you accidentally start a fire in your kitchen and damage the unit or your property, your renters insurance will protect you under the property damage coverage section of the policy. To get technical, the landlord’s insurance would cover the cost of damage to the actual building, while your renters insurance would reimburse you for the repair/replacement of your personal property.
Other Common Risks Worth Considering Coverage for
Renters insurance doesn’t cover everything, which is why it’s a good idea to consider other risks that may require additional types of coverages or endorsements. Consider the following coverages to further protect yourself from unnecessary risks:
- Flood/earthquake insurance: If you live in an area prone to either of these types of disasters, you should really consider getting a flood insurance or earthquake insurance policy, or both, if applicable. Damage from natural disasters can be extremely expensive, and without adequate coverage, you could even end up losing all of your stuff.
- Personal property endorsements: If you’re worried about more expensive personal property like electronics or jewelry getting stolen, lost, damaged, or destroyed, it’s a good idea to purchase endorsements for specific pieces you’d like to increase coverage limits for.
- Home-based business endorsements: Standard renters policies protect against third-party injuries on your property, but you’re not protected if you run a business out of your home. You’ll need to add this endorsement if you have a home office or studio in order to ensure you have adequate liability coverage.
Talk to your independent insurance agent about more common risks affecting all renters so that you can get set up with the right coverage from the start.
Here’s How an Independent Insurance Agent Can Help
When it comes to answering your important questions about renters insurance and all other coverages out there, no one’s better suited to help than an independent insurance agent. These agents search through multiple carriers to find providers who specialize in renters insurance, deliver quotes from a number of different sources, and walk you through them all to find the best blend of coverage and cost.
TrustedChoice.com Article | Reviewed by Paul Martin
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