What is Renter’s Insurance and Why Do You Need It?

What is renter’s insurance?

Renter’s insurance covers damage to or loss of your personal property. Whether you rent from a homeowner, a property manager, or a university (as a student living in a dorm), consider purchasing renter’s insurance.

Why do I need renter’s insurance?

Landlords insure the physical apartment building or home against damage from occurrences like fire, hail, and vandalism. However, their insurance policy does not cover your belongings, so don't expect the landlord to owe you payment should anything happen. Another reason to get renter’s insurance is to protect you against any accidents caused by other tenants.

Renter’s insurance can also protect against liability lawsuits or medical bills of guests injured in your apartment, that the landlord’s policy would not cover.

Some landlords will require you to purchase renter’s insurance. If so, this would be stipulated in your lease or lease riders.

What kinds of loss of or damage to property does renter’s insurance cover?

Coverage can vary depending on your insurance company and policy. In addition to cost, this can help you choose from where you want to get rental insurance. For example, some of the better-known places do not cover damage from floods, unless you pay an extra charge. If you live in an area prone to floods, it makes better sense to search for options where flood protection is included.

How does renter’s insurance work when you need to replace your property?

There are two kinds of payouts: actual cash value and replacement cost coverage. Actual cash value pays an amount equal to the current cost to replace your items minus the depreciated value. On the other hand, replacement cost coverage pays you the amount it would cost to replace your lost or damaged property. You only get the money if you replace the items. There is also usually a limit on how much money you receive, and the premiums tend to be higher.

The deductible is the amount you pay for the lost or damaged goods, before the insurance company would begin paying. Typically, the higher the deductible, the less your policy will cost.

I have a roommate? Do we each get our own policy?

It depends on the policy. Some insurance companies offer one policy that covers multiple people. Others require each person to get a separate policy. Check with your insurance agent to insure you have proper coverage.

Are there any discounts available?

Some insurance providers offer discounts to people who already have or have had insurance with the company. Check to see if your motor insurance provider has such discounts, and you may be able to save some money by bundling the insurances together.

Where do I obtain a renter’s insurance policy?

If you do not have an insurance company already, there are several websites like netquote.com or insureme.com that provide quotes from several different companies at the same time. Most major insurance companies will provide quotes online or over the phone. Be sure to do some research into the reputation of the insurance firm you select. Finally, asking for referrals from friends and family can also be helpful when trying to find a reliable insurance company.