If you’re considering renters insurance, you want to make sure it’s something you actually need.
Some landlords or property companies require it; but if your landlord or property does not – should you still choose renters insurance? It’s probably a good idea, and here’s why…
Renters insurance gives you peace of mind knowing your valuables are protected in the event of a covered loss.
What is Renters Insurance?
Renters insurance is coverage designed to help protect you and your personal possessions when living in a rental home or an apartment. Typically, renters insurance has three types of coverage:
- Personal Property
- Additional Living Expenses.
These coverages are tailored to protect you from financial loss, replace your possessions, and provide additional living expenses due to unexpected events.
Personal Property coverage can help cover the cost of damaged or stolen items due to an unexpected covered loss.
Liability coverage covers bodily injury and/or property damage that you become legally obligated to pay to others.
Additional Living Expenses coverage provides additional living expenses that incur due to covered damage to your home that creates an unsafe living condition. This could include expenses like hotel bills or increased food expenses from not having access to your home.
What is the Difference Between Renters Insurance and Tenant Dwelling Insurance?
Renters insurance is for anyone who is renting a residence; and tenant dwelling, also known as tenant-occupied dwelling insurance, landlord insurance or rental dwelling insurance, covers the dwelling (the home) that a tenant is living in – not the tenant’s personal property or personal liability. Tenant dwelling coverage should be purchased by the property owner for coverage for the property; but renters insurance should be purchased by the tenant for coverage for personal property and liability.
How Much Coverage Do You Need?
Figuring out how much coverage you need is as simple as creating an inventory of your possessions. This will give you an idea of how much coverage is needed. Keep notes on what the items are, when you purchased them, and how much you paid.
Replacement Cost vs. Actual Cash Value
There are two types of renters insurance policies. An actual cash value policy and a replacement cost policy.
Replacement Cost will cover the cost of repairing or replacing your item at its current price.
Actual Cash Value will cover the actual cash value of your possessions. The actual cash value of an item is the value of the item today, not how much you paid for it initially. Depreciation happens over time and will reduce the value of your items.
So which policy is better? Deciding on which insurance policy is best for you is specific to your personal needs. If you require more protection, a replacement cost policy might be better suited for you. This policy generally pays out more than an actual cash value policy.
If you are comfortable with receiving less reimbursement after a covered loss, an actual cash value policy could be the better choice. This policy generally pays out less but is less expensive than a replacement cost policy.
Deductibles and Limits
A deductible is the amount of money you are responsible for paying before your insurance will start to pay for your covered loss. For example, if you have a deductible in the amount of $500 and a fire damages your furniture in the amount of $2,500, you would be responsible for the first $500 of the $2,500 and your insurance would pay the additional $2,000.
You typically have the option to choose the amount of your deductible when purchasing renters insurance. In general, the larger the deductible is, the lower the insurance premium will be.
Some personal property coverage has limits on the maximum amount the policy will pay to a policyholder. Your policy declaration page will indicate your coverage limits provided by your renters insurance policy. Your insurance agent can help you with adjusting the limits of your policy if you decide to purchase additional coverage.
What Does Renters Insurance Cover Against?
Renters insurance generally covers you against losses from fire, smoke, lightning, freezing, theft, vandalism, malicious mischief, windstorms, explosions, and certain types of water damage.
It’s important to keep in mind that renters insurance policies do not cover everything. Earthquakes and floods are a few examples of losses that may not be covered
Reading through your insurance policy closely to find out what all your renters insurance will cover is the best idea in understanding just what your policy will cover in the instance of a covered loss!
Have additional questions about renters insurance? Contact your local agent to find out more!
*Some exclusions apply. All coverages are subject to deductibles and policy limits. This is not an insurance policy. It is intended only to provide a general description of Alfa Insurance® and/or its product lines and services. An actual policy contains the specific details of the coverages, conditions and exclusions. Your Alfa® agent can explain the policy and benefits and answer any questions you may have before you buy.