If you rent an apartment or a house, you may think you’re off the hook for home insurance. That’s true as far as the structure is concerned. But your belongings and your financial assets are still at risk; plus, your landlord may contractually require you to carry some renters insurance.
Renters insurance provides essential protection against:
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Damage to or theft of your personal property,
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Claims you are liable for injuries sustained by others in your home, and
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Liability costs if you accidentally injure someone off your premises or damage their property.
It can also cover the cost of a hotel or other living expenses if your rental is damaged by an insured loss.
Renters Personal Liability Insurance
When most people consider home insurance, they think of their property, but for renters, your risk exposure is likely higher for personal liability claims than for property. These are claims result from a visitor sustaining an injury at your residence or from an accident in which you hurt someone or damage their property. Renters personal liability insurance can also apply to pets at and away from your residence. With medical costs and legal fees, liability claims can be extremely expensive.
Here are some common examples of how renters personal liability insurance can save you from large financial losses:
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A guest slips on a slick spot in your kitchen and breaks an elbow. That person may turn to you to pay medical bills and lost income. Without renters insurance with personal liability coverage, you would have to pay any legal bills and compensation out of pocket.
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Your dog gets overly excited and bites someone. You could face substantial bills for treatment, cosmetic surgery, lost income, pain and suffering, and attorney fees. A renters personal liability insurance policy would step in and pay these costs up to the limit of your coverage after you pay your deductible.
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Your child is playing at someone’s home and accidentally breaks a sliding glass door. The replacement cost is thousands of dollars, but with personal liability insurance, you are covered after you pay your deductible.
For renters in apartment buildings or condominiums, the landlord is typically insured for accidents that occur in common areas, but renters of houses must insure for accidents on the entire property. This is especially important to note if you have outdoor play equipment, staircases, or walkways.
Note that some insurance companies limit the types of dogs they will insure, deeming some breeds as aggressive. And if you added your dog after you got your renters policy, be sure to update that information at the policy’s renewal date or earlier.
Remember that inexpensive renters policies typically have low liability limits. If you have an umbrella liability policy, it may require you to maintain stipulated limits that are higher than a typical renters policy. It is not expensive to get higher limits, and a conversation with your agent can help you assess your needs.
Renters Personal Property Insurance
A landlord’s insurance policy insures your rented dwelling for structural damage, to include the walls, floors, and installed appliances owned by the landlord, such as the stove and refrigerator. It won’t cover any of your personal property, though. So, if you own the washer/dryer, fridge, or other expensive items, such as upgraded blinds or draperies, you would need renters insurance for the cost of replacement resulting from a covered loss.
Renters Personal Property Insurance
Renters insurance typically covers a variety of perils:
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Fire
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Windstorm
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Water damage from broken pipes or water intrusion (but not flood)
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Lightning damage to electronics
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Theft
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Vandalism
Check with your insurance agent to see whether you should buy a separate flood, earthquake, or windstorm policy. These can be written to cover building contents only, or you may be able to add a contents-only endorsement to your renters policy in some states.
If you run a business from your home, you may need some business property insurance. Many insurers restrict or exclude coverage for business equipment and inventory from a personal lines policy. Also consider whether you might need a separate cyber insurance policy if you are doing gig work.
What If a Disaster Displaces Me from My Rental?
If a fire or other covered event renders your dwelling unlivable, you may need to pay for a hotel or other accommodation plus expenses for dining out while your home is repaired. A renters insurance policy usually covers these costs, but ask your agent whether your policy includes ALE, or additional living expenses.
ALE coverage, also called “loss of use,” typically will limit payouts to about 20% to 40% of your personal property insurance limit. You can choose that limit, which is the total amount of coverage you will have for all your personal belongings, when you purchase your policy. Know that ALE does not pay for all your expenses but, rather, the costs of displacement that exceed your normal expenditures. For example, the policy usually does not cover the monthly rental.
Additionally, most policies set a cap on the amount of time you can use ALE benefits — usually a year or two, which should be ample for most displacement events. You will need to pay for your expenses up front and send the receipts to your insurer for reimbursement, so keep good records.
Get a Professional Agent’s Help
An insurance professional can help you get coverage that best aligns with your lease, your lifestyle, your possessions, and your budget. Renters insurance is quite affordable considering the protection it provides. Find a trusted renters insurance agent near you.