Do You Need Renters Insurance?

Would your rental home and personal belongings inside be financially protected if an unexpected loss occurred? If you don’t have an answer to that, renters insurance may be a smart choice for you. Although your landlord has policies in place that protect the property’s structure, it won’t cover your personal belongings and valuables. Whether you’re in a studio room, college apartment, or temporary home, securing coverage is always a good idea.
Renters insurance is more affordable than you might think, making it a wise investment for protection. No matter your stage of life, renters insurance can be a financial lifesaver when the unexpected happens.
What is Renters Insurance?
Renters insurance coverage is designed to help protect you and your personal possessions when living in a rental home or apartment. Typically, renters insurance provides the following coverages:
Personal property coverage can help with 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.
Loss of use coverage provides additional living expenses that incur due to covered damage to your home that creates an unsafe living condition. This might include hotel bills or increased food expenses due to having limited access to your home.
These coverages are tailored to protect you from financial loss, replace your possessions, and provide additional living expenses due to unforeseen events. All coverages are subject to deductibles and policy limits.
What does Renters Insurance cover?
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 examples of losses that may not be covered.
To find out what your renters insurance will cover in the instance of a loss, read through your insurance policy closely. If you have additional questions about your coverage, contact your insurance agent.
How much coverage do you need?
Figuring out how much coverage you need is as simple as creating an inventory of your possessions. Keep an ongoing list of your personal items, along with their names/models, date of purchase, and their value. After getting an estimated total of what your possessions are worth, would you have enough money to replace everything if they were damaged?
What’s the difference between Renters Insurance and Tenant Dwelling Insurance?
Renters insurance is for anyone who is renting a residence. 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 on the property, but renters insurance should be purchased by the tenant for personal property and liability coverage.
Does your college student need Renters Insurance?
If your child is moving away for college, they probably have personal items they’d like to take with them like laptops, electronics, and other valuable items. Students who live in dorms or on campus might not be required to have renters insurance; however, their personal belongings may be covered under a parent’s homeowners policy, subject to their deductible. Students living off campus may be required by their landlord to have renters insurance. In either case, it may be wise to have that additional coverage so your student can enjoy their college experience without disruptions.
Replacement Cost vs. Actual Cash Value
There are two types of renters insurance policies: actual cash value policies and replacement cost policies.
Actual cash value covers 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. The value of your items decrease over time, which is known as depreciation.
Replacement cost covers the cost of repairing or replacing your item at its current price. Replacement cost does not factor in depreciation.
So, which policy is better for you? Deciding which insurance policy works for you depends on your unique needs. If you’re seeking 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’re comfortable with receiving less reimbursement after a covered loss, an actual cash value policy could be a better choice. Actual cash value policies are usually more budget-friendly than replacement cost policies.
Deductibles and limits
A deductible is the amount of money you are responsible for paying before your insurance will start to pay for a 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 you purchase renters insurance. In general, the larger your deductible is, the lower your insurance premium will be.
Some personal property coverage has limits on the maximum amount the policy will pay. Your policy should indicate your coverage limits. Your insurance agent can help you with adjusting the limits of your policy if you decide to purchase additional coverage.
Renters insurance doesn’t just protect your ‘stuff,’ it preserves your lifestyle and ensures that setbacks don’t disrupt your peace of mind. Contact your local Alfa® agent today to learn more about renters insurance coverages.
*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 deductibles, coverages, conditions and exclusions. Your Alfa® agent can explain the policy and benefits and answer any questions you may have before you buy.