Renters insurance 101- Should you cover your rentals?

Renters insurance, or HO-4 insurance, protects renters from financial burdens that happen due to perils like theft, fire, liability, lawsuits and more. You can purchase a standard renters policy and protect yourself from a pre-described set of perils, or you can also tailor your policy according to your needs.

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Renters Insurance vs. Condo Insurance

Most insurance seekers may see renters insurance and condo insurance as the same thing, but it is not the case. You cannot expect your condo insurance to cover your losses from your rental residence. Here are a couple of differences between the two:

  • Condo insurance is for people that actually own their unit. Renters insurance is for people who are living in the unit, but do not own it.
  • Renters insurance will not cover for the damage to the dwelling. Condo owners own everything in the unit, so their insurance has dwelling coverage.
renters insurance

Why do you Need Renters Insurance?

Your landlord may have provided you with shelter, but he won’t provide you with compensation if things go wrong. This is why you must have renters insurance.

Did someone break in and steal your laptops and TV? Renters insurance will reimburse you.

Did your dog unexpectedly bite a guest, sending them to the hospital for stitches? Renters insurance will help cover medical expenses.

Additionally, Forbes reports that while the coronavirus pandemic led to a record 3 million jobless claims for the week of March 2020, a bunch of insurance companies offered their tenants temporary payment suspension. Such grace periods show that these companies genuinely care for their policyholders’ financial and mental health.

Multiple coverage options on your fingertips.

Choose from various options and select the policy
that best suits your requirement.

What Does Renters Insurance Cover?

Here are the three key components of renters insurance coverage:

Personal Property

While renters insurance doesn’t cover your dwelling, your belongings and possessions are safe against loss due to theft, riot, fire, falling objects, etc. Naturally, this policy won’t cover flood and earthquake either, but you can possibly add them for an additional fee as an endorsement. You get to choose between two reimbursement options: actual cash value and replacement cost coverage. An actual cash value policy will reimburse you the exact amount of cash you paid for your belongings. Replacement cost coverage will replace the exact damaged item.

Renters property coverage will cover your property even if it is away from home. Suppose you lose your laptop during your commute home. Renters insurance will take care of the expenses incurred to replace it.

Moreover, your policy will also cover other people’s items in your home. Let’s say your friend loans you their laptop, but a burst pipe damages it. Your renters insurance policy will cover your friend’s laptop.

Liability Coverage

Renters liability insurance will cover the expenses of your guests if they suffer injuries in your home. This coverage covers their cost of their medical and legal bills.

Suppose your friend comes to visit you one day, and accidentally trips and falls. They have an injured knee, and need medical attention. Your renters insurance will take care of the fees. If they file a lawsuit against you, your coverage will also cover a portion of the cost.

Suppose a fire breaks out in your apartment, reaches your neighbor’s premises, and harms them, then you can rest assured that your renters insurance policy has your back.

Additional Living Expenses (ALE)

If something happens to your residence that isn’t your fault and makes your home uninhabitable, then your expenses for living temporarily away from home will be covered by your renters insurance coverage. This means, your insurance coverage will cover your hotel bills, meals, temporary rentals, and such.

For example, a pipe bursts in your apartment, and you need to stay at a hotel while the damage is being repaired. You are now paying for the hotel, your meals out (no kitchen at the hotel), a long commute, and other expenses which may not have happened if it wasn’t for the damages in your apartment. With apartment renters insurance, your expenses will be covered.

what does renters insurance cover

What Are The Exclusions?

Of course, renters insurance doesn’t cover all risks. As stated earlier, this coverage excludes loss due to flood and earthquakes, but you can add them on as an endorsement for an additional fee. Liability coverage for intentional loss and damages incurred under the influence of substances are not covered as well.

Property damage

Since you do not own the property, property coverage is not necessary for you. Your landlord probably already has that covered in their insurance, so you are off the hook.

Flood, earthquake, and other specific natural disasters

The standard tenant insurance excludes these natural disasters, but some companies will allow endorsements.

Pests

Rodents, bed bugs and other pests will not be covered in your standard policy. In case you want to get rid of the pests, your insurance will not cover for an exterminator either. Think carefully before investing in a rental with a pest problem, as damages thus incurred are not covered.

Unless your roommate is in some way related to you by marriage or blood, they are on their own if they suffer losses. Your insurance cannot help them out, unless they are specifically listed on your policy. Know that adding them will cost you extra. We suggest that each tenant get themselves covered with their own policies.

If your possessions are stolen from your apartment your insurance will help cover the losses, but not if you don’t have proof that you own it. Traditionally, you will be asked for receipts. However, if you have pictures of the possession in question, it may be sufficient.

Car damage

Your possessions are still covered by insurance if they get stolen from your car. However, your car itself is not covered. You’ll need car insurance to physically protect your car.

Renters insurance is a necessity, not a luxury. You need to protect yourself and your possessions from threats all around you. Find an insurance agent near you today! 

Has this article been helpful to you? Leave a comment below and share your thoughts with us.

Multiple coverage options on your fingertips.

Choose from various options and select the policy
that best suits your requirement.

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