Not many people know about renter’s insurance and the importance of acquiring it. I hard to learn about it due to an unlucky turn of events. A common misconception is thinking that your landlord is liable for any damage or loss to your property while inhabiting their building. In fact, landlords are only responsible for the insurance necessary to protect the structure itself from damage. As a tenant, it is up to you to protect yourself and your belongings by taking the right insurance cover.
What Is Renter’s Insurance?
Renter’s Insurance is a liability cover taken against loss, theft, vandalism, or any other damage to your personal belongings. It also protects you against liability claims made by a person who suffers injuries while in your rental space. However, injuries resulting from the structural issues in your building are covered by the owner’s and not the renter’s policy.
Renter’s insurance is not a mandatory requirement in my state. However, landlords are increasingly requesting their tenants to provide proof of insurance before renting their establishments. Even though they require you to have insurance so that they can protect themselves, it still does not invalidate its importance in your life. Even if you are just starting out or do not plan to be in a rental for long, get a renter’s insurance cover. They are hassle-free and do not take too much time to get yourself covered.
How Do I Apply for Renter’s Insurance?
Carry Out an Appraisal
Before you begin your application process, you need to inventory everything you own and want to be covered by insurance — anything ranging from jewelry and clothes to electronics and furniture. Even your vintage DVD collection is legible for cover. Taking an inventory prevents you from underestimating your belongings’ actual value, which would result in you under-insuring yourself.
While most insurance companies do not require you to bring this inventory when taking out a cover, it is necessary while making a claim. Remember to take pictures or video recordings of these belongings. Your inventory should also include a record of the serial numbers for especially expensive belongings.
Choose an Insurance Provider
Information from your appraisal will help you to determine how much insurance you need to take out. Once you have a number, do your research about insurance companies, and find one that suits you and is in your state. You can even ask for recommendations from your family and friends. Some of these insurers have an online site and allow online applications, saving you the hassle of going to their offices.
As you carry out your due diligence, one important tip I learnt was that it’s ok to apply to multiple insurance providers and compare their rates. You can always turn down an offer that does not suit your needs.
Decide on the Type of Policy You Would Like
Renter’s insurance offers two types of coverage; actual cash value and replacement cost. Actual cash value reimburses you for the property’s actual value at the time of loss or damage. Replacement cost covers the total amount it would take to replace all the damaged or lost items with new ones. Because of this, Replacement cost coverage is at least 10 percent more expensive than Actual cash value.
At this point in the process, you should also decide what your deductible will be. A deductible is the amount of money you are willing to spend to replace your belongings and how much money you want your insurer to cover. Deductibles range from $500 to $2,000. You can always start low and then increase it later.
Start Paying for the Policy
Renter’s insurance is cheaper than homeowners’ insurance. Insurance companies will also give you a major discount if you take measures to reduce their risks. These measures include installing fire and burglar alarms, fire extinguishers, secure locks, doors, etc. If your insurer has a policy that pays annually and you can afford it, I advise you to take it. They are usually cheaper than paying for your policy in monthly installments.
What Can and Cannot Be Covered
Renter’s insurance can be taken out by anyone renting, leasing, or subletting. It could be a studio apartment, a mobile home, a condominium, a townhouse, etc. If you are renting the place, you can be covered by insurance.
Renter’s insurance covers a lot of things but not everything. Here are some of the liabilities covered by renter’s insurance:
- Coverage for personal possessions, e.g., loss resulting from theft, fire, vandalism, water leakages, etc.
- Liability coverage, e.g., protection against lawsuits or liability claims made by persons injured or had their property damaged while in your rental space.
- Additional living expenses, e.g., living expenses caused by an event that made your rental space inhabitable for a certain period.
However, basic renter’s insurance does not cover damages caused by natural disasters such as earthquakes, floods, sinkholes, hurricanes, etc. It also does not cover damages made to your car, undocumented belongings, your roommate’s belongings, etc.
Do I Really Need Renter’s Insurance?
No matter how careful you are with your belongings, you have roommates or neighbors who are not. Your roommate could be careless with the blender, which causes a short circuit that damages your new Mac laptop. An irresponsible neighbor could decide to have a night of fun and sleep with a cigarette in their mouth and a glass of whisky in hand.
Worst case scenario, they thought they switched off their gas when they did not. While these situations are far-fetched and unlikely, it still does not mitigate the fact that they are wildly possible case scenarios. Do not think of it as ‘wasting’ a couple bucks a month. Think of it as having something to fall back to in the event of a disaster.
