WHAT DOES RENTERS INSURANCE COVER?
How does Renters Insurance Work?
Invited Guest Contributor: Cherise Threewitt
What Does Renters Insurance Cover?
Typically, renters insurance provides three types of coverage: personal property coverage, renters liability insurance, and additional living expenses. Different insurance companies sometimes give different names to these coverage types, but in general, they all function the same way.
Personal property or personal belongings coverage is what most people think of when it comes to renters insurance. Personal belongings include things like furniture, clothing and shoes, electronics and devices, appliances and kitchen equipment, home goods such as bedding and towels, and most sports and hobby equipment such as bicycles and musical instruments. Certain personal belongings may be excluded from a standard policy if they're above a certain value, such as jewelry, artwork, collectibles, and specialized computer or hobby equipment. A policyholder will have the option to add coverage for items that exceed standard coverage limits. These policy add-ons are usually known as riders, floaters, or additional personal property coverage, and they are an affordable way to ensure you’ll be compensated if your valuables are stolen, damaged, or destroyed.
When you’re discussing a new renters insurance policy with your insurance company, you may be able to choose between two different types of personal property coverage: actual cash value and replacement cost coverage. In a nutshell, actual cash value coverage compensates you for what your items are worth in used condition. Your insurance premiums will be lower, but if your items are stolen and destroyed, you’ll be compensated for worn clothing and bedding, old and depreciated computer equipment, and so on. As a result, it’s likely that your insurance settlement won’t provide sufficient reimbursement to purchase new replacements. With a replacement cost policy, you’ll pay higher premiums, but you’ll be compensated for what it costs to replace all your old possessions with new ones.
Renters liability or personal liability covers the policyholder in case of a lawsuit resulting from incidents originating on the rental property, such as accidental injuries, injuries from household pets, or accidental damage to a neighbor’s personal property. Your personal liability coverage can usually be increased or augmented with an umbrella insurance policy if needed.
Additional living expenses coverage provides reimbursement if a covered disaster results in temporary relocation from the rental property. This ensures the policyholder is compensated for additional lodging, food, and other living expenses while they are living somewhere else. Covered disasters generally include smoke, fire, explosions, theft, vandalism, windstorms, lightning, and water damage from internal sources, such as plumbing or intrusion from a neighboring unit, according to the Insurance Information Institute. Common exclusions include earthquakes and floods from weather or other external water sources.
What Is Renters Insurance?
If you rent your home, you should consider buying renters insurance. You can get renters insurance whether you’re renting an apartment, condo, townhouse, other attached dwelling, or a single-family home.
It’s a common misconception that if a disaster occurs on your rental property, your landlord can be held financially responsible for any damage to your personal belongings, any injuries that result, and extra expenses that you may incur. The truth is, whatever insurance coverage the landlord has on the building or the rental unit doesn't cover you as a renter.
Renters insurance covers the policyholder’s personal property, which refers to all of a renter’s belongings. This includes:
- Clothing
- Electronics
- Appliances and kitchen equipment
- Bedding and towels
- Most sports and hobby equipment, such as bicycles and musical instruments.
It doesn't cover fixtures of the rental unit, such as built-in appliances.
There are two other components of a standard renters insurance policy that are beneficial: liability coverage and relocation coverage. In addition to property coverage, renters insurance covers the policyholder's legal and liability expenses related to lawsuits resulting from accidents occurring on the rental property. It also compensates for additional living expenses if the policyholder and other covered occupants are forced to relocate temporarily due to a covered disaster.
While these are the typical coverages, policies vary. As a result, it's important to carefully compare the details of any policies you're considering. Commonly covered events include smoke, fire, explosions, theft, vandalism, windstorms, lightning, natural disasters, and water damage from internal sources, such as plumbing or leaks from a neighboring unit. Earthquakes and floods from weather or other external water sources are usually not covered.
This, and many more questions may come to mind. Do your research and examine all of your possibilities. These personal choices should fit comfortably into your lifestyle!
"...smart advice...to help make smart decisions..."
908 803-0472
"...the right relationship means everything..."
SERVING THE SOMERSET HILLS AREA ONE CLIENT AT A TIME
Service & Experience
Since 1983