The Right Amount of Renters Coverage

If you are renting a condo, an apartment, or another type of housing, purchasing a renters insurance policy may benefit you. Renters insurance can help you to regain (or replace) your belongings that were damaged, stolen, or lost during an incident. It can also protect your visitors when they get injured in your home.

When purchasing a policy, ensure that your policy can cover the cost of replacing every important personal belonging in your home. If you are willing to sacrifice some coverage, your policy may be more affordable. Tenants should think carefully about how much coverage they need before signing up for a policy.

Is Renters Insurance Required?

Currently, renters insurance is not a requirement by any state. But, your landlord may require you to buy a policy for your personal property. Most landlords require you to obtain a renters insurance policy to protect themselves from damages that you cause to the apartment. It does not hold you personally liable for any damages, but holds the insurance company liable as they are insuring the property.

It is important to note that your policy will generally only last for the duration of your lease. Each subsequent lease renewal will require a new policy. You will usually be able to obtain the same rate when you renew your renters insurance contract. Speaking of lease renewals, your landlord may add more terms and conditions to the contract. If your landlord adds renters insurance as mandatory and you sign the lease, you are bound by it.

A typical policy costs $10 – $20 per month for property coverage of $15,000 and $100,000 in liability coverage. This may be a condition required by your landlord before renewing your lease. After seeing how much is required monthly, it is recommended to shop around for rates from at least three insurers.

What Is Your Risk Tolerance?

Risk is uncertainty with the outcome of an event that can be negative or positive. Is it crucial to protect yourself against uncertainty. Yes, but everyone reacts in a different way against uncertain situations. Some people might prefer to have enough protection and transfer all the risk to an insurance company. Others will choose basic coverage and have the bigger portion of the risk.

If you always want to pay the lowest deductible as possible, your risk tolerance is lower. When you reduce your deductible, the more you transfer risk to your insurer. This means you want full coverage to avoid bad surprises. On the other hand, if you opt to pay a high deductible, then your risk tolerance is high. This means that in the event of a loss, you would have to pay for damages and repairs up to your deductible amount before you receive from an insurer. Whether you have a high or low risk tolerance, it is recommended to at least have a basic coverage to protect yourself from disaster.

What A Basic Renters Insurance Policy Covers

A renter’s insurance basic policy is designed to protect you and your personal property. Typically, a renter’s insurance policy will provide three types of coverage namely:

  • Personal property
  • Personal liability
  • Loss of use

Let’s explore each of these in more detail.

Personal Property

This coverage will pay for the cost of replacing your personal belongings in the event of a loss. It protects your possessions up to your policy’s limit.
Personal properties may include:

  • Furniture
  • Electronics
  • Clothes
  • Jewelry
  • Art
  • Watches
  • Computers

If you have expensive valuables such as jewelry or rare art, you might want extra coverage for those items. Consult your insurer or agent on how to structure your specific policy. Below are some of the risks addressed by a renters insurance policy:

  • Fire or lightning
  • Theft
  • Vandalism
  • Falling objects
  • Smoke damage
  • Volcanic eruptions

Personal Liability

Personal liability coverage will pay for bodily injuries and other people’s property when you are at fault. It covers incidents that may lead to personal liability claims. For example, a visitor accidentally drowns in your swimming pool and you are found to be at fault. This coverage will also pay for medical expenses of the victim in should they go to a hospital. If the case goes to court and you get sued, the same coverage will pay for your defense and bail.

Remember personal liability coverage pays for medical expenses for other people and not you.

Loss Of Use

Loss of use protects you when misfortune happens and you are unable to live in your rented home for some time. For example, a fire damages your apartment, and it forces you to seek alternative living space when your rental unit is undergoing repair. This coverage will pay for the extra cost you incur above your ordinary everyday expenses as a result of a covered loss. Loss of use will pay for:

  • Hotel Stays
  • Meals
  • Laundry cost
  • Pet boarding
  • Luggage storage

If you were living in a one bedroom apartment, your insurer would expect you to seek an alternative that matches your lifestyle. You cannot go to live in a 5-star Hotel presidential suite and expect your insurer to pay just because loss of use covers you. Now that you have a basic understanding of a renters insurance policy, you will be able to better search for a policy that covers you. Remember to keep in mind your risk tolerance, the value of your belongings and let this determine how much coverage you need.

Interested in learning more? Begin your free online quote to get started. We look forward to helping you obtain the best renters insurance policy for your needs.