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What does renters insurance cover?
As a new renter, I’m curious about what all is covered under my insurance. I've never reviewed a policy before, but almost all of the leases at apartments I'm considering require me to purchase a policy. Can you give me a basic overview of what kind of coverage I can expect?
This is a great question, and one that a lot of first-time renters have. The short answer is that renters insurance covers damage or destruction of your personal property as well as liability coverage. While there are other nuances to coverage, these two are the dominant areas you should worry about.
Another important preliminary fact to keep in mind is that renters insurance only provides coverage for personal property or from a liability standpoint if the problem is a covered peril. A covered peril is a fancy way of saying that some event happens that's named in your policy.
I'll go into greater detail below about the ins and outs of renters insurance coverage. If you'd like to speak with someone personally about coverage, an independent insurance agent is a great resource.
How does renters insurance cover personal property?
Renters insurance will pay to repair or replace personal property that's damaged or destroyed due to a covered peril. By personal property I mean things like furniture, clothing, electronics, jewelry, and even appliances.
Expensive property, like artwork, with high valuations won't be covered by a typical renters insurance policy. You'll have to buy additional coverage for that.
Now if you're wondering what a covered peril is, it's generally something along the lines of the following:
- Smoke damage (generally related to fire damage, but listed as a separate covered peril)
- Plumbing or appliance leaks
- Falling objects
- Short-circuit damage
There could be a number of other covered losses under your renters insurance policy. However, these are a general sample that should give you a good idea of what to expect.
Most individuals have personal property coverage of about $25,000. This doesn't mean that amount is right for you. It's best to take an inventory of your personal property to figure out how much it would cost to replace everything, were it all destroyed.
If you want to discuss specific policy options or are concerned about any particular covered peril, talk to an independent insurance agent.
How does renters insurance cover liability?
Personal liability and medical bills is the other half of renters insurance. It's also the half that can be a bit more confusing. Let's break it down.
Liability is a fancy way of saying that you're legally responsible for something. If someone slips and falls down your stairs and it's because you left something at the top of the staircase, you're going to be responsible for their medical bills and other costs.
Renters insurance will cover those medical costs if the victim submits a claim to your insurer and the insurer decides you were responsible. Even if the insurer doesn't decide you're responsible, the victim could sue to appeal the insurer's decision. In that case, your legal costs are covered up to the policy limit, too.
Most people are covered up to $100,000 in liability, but that doesn't mean the same limit is right for you. If you have a pool or trampoline in your backyard, you may want more coverage because more things could go wrong on your
property. If you aren't sure how much coverage makes sense for your home, an independent insurance agent can help with that.
Does renters insurance only protect me at home?
Luckily, the answer is no. Renters insurance protects your personal property and potential liabilities no matter what you go. The only catch is that you won't be covered to your policy limit if the covered peril doesn't happen at your home.
If you're traveling and your laptop is stolen, you'll be covered. But if your policy limit is $25,000, you'll probably be covered for up to 10% of that. This would mean your insurer would pay $2,500 minus your deductible to help you replace the item.
The percentage of coverage will vary depending on your policy. If you want to talk through the different coverage limits, talk to an independent insurance agent.